Food Price Inflation and Non-Food Inflation Both Reported Increases Last Month



Rising wheat prices and oil prices have caused an increase in food inflation.

Rising wheat prices and oil prices have caused an increase in food inflation.

Food price inflation hit a 15 month high in September. The cause of inflation on food is blamed on the rising cost of wheat which is an ingredient in many consumer food products as well as obvious many wheat staples such as bread and pastries. Wheat is also a feed grain and an increase in the cost of feeding livestock eventually cyphers down to the consumer. Rising oil prices are also hitting food price inflation as the cost to transport products to market adds to the cost.

According to the monthly survey by the British Retail Consortium (BRC) and Nielsen reported the rising price of wheat and oil is the reason for overall inflation in fact. Overall shop price inflation rose to 1.9 per cent in September which was an increase of 0.2 per cent from August. Non-food inflation increased by 0.7 per cent.

The good news is that according the BRC director general, Stephen Robertson, the 15 month high inflation rate in September may have been the worst we will experience. He said: “Food inflation is at a 15-month high as the effect of earlier rises in wheat and oil prices work through to things like bread and meat, but these production costs appear to be stabilising now.”

In regard to non-food inflation he commented on the increase in the cost of cotton which is currently 69 per cent higher than this time last year: “Clothing was largely responsible for non-food inflation increasing for the first time in five months. Clothing is still cheaper than a year ago, and 15 per cent cheaper than five years ago, but rising cotton costs have slowed the pace of those price falls.”

Highly regarded business man, Sir Terry Leahy, the chief executive of Tesco, also believes food inflation should level. He said: “There is a bit of food price inflation. It is not quite as high as sometimes you read – it is between 2 per cent to 3 per cent. It may go up a bit but it will not reach the heights of 2007 when it was up between 8 to 10 per cent.”

Comments & Debate

  1. October 6, 2010 at 12:36 pm prof baldwin Commented:

    Tesco claim that food inflation is “not quite as high as sometimes you read” – is that before or after Tesco have been using ‘shrinkage’ marketing via their suppliers ?

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