Sky News business presenter Emma Crosby

Business at my local Chinese takeaway is brisk. “So, no sign of an economic downturn here” I ask the owner as he takes another order for chicken chow mein.

“Well” he says, “People are still enjoying their Saturday night takeaway but I can tell you my costs are going up. The rice I buy has jumped 40% in price in a year alone.”

That’s clear evidence of how soaring food inflation is affecting people we know. And being a Chinese takeaway, rice is hardly a supply the owner can cut back on. Is he passing on the rises to his customers? Not yet, but surely it’s only a matter of time before he can no longer absorb the costs himself.   

On the international markets, rice hit a record new level of $24.745 per 100 pounds yesterday. Traders blame fears the world’s largest exporter Thailand might limit foreign sales as the country tries to feed its own people.

That’s not the only food that’s going up in price. Milk, wheat, eggs, meat and vegetables have jumped in value so much experts now believe food inflation is more than seven times the official rate of inflation – the highest in a generation.

Yet are we feeling the pinch? A quick round robin with the lovely ladies who are in charge of make up at Sky News and the conclusion seems to be they haven’t really noticed food in supermarkets getting more expensive. And they shop pretty much everywhere from ASDA to Waitrose. What about you? I’m really keen to hear if you’ve seen your receipts getting dearer.

Team this news with oil prices crashing through record highs ($119 a barrel in New York yesterday) on an almost daily basis. No one will disagree we’re all seeing this very clearly at the petrol pump and when our gas and electricity bills land on our doormat.

Which is why it doesn’t come as too much of a surprise to hear that some city experts believe that inflation really stands at 3.5%, not the government’s calculation of 2.5%.

So, when reading the minutes from the Bank of England’s latest monetary policy committee it was interesting to see that 2 policy makers voted AGAINST last month’s interest rate cut.

And that’s despite overwhelming evidence for a cut such as a slowing economy, fears of a US recession, warnings from our very own Chancellor that the credit crunch is the worst financial crisis since the Great Depression and a falling housing market.

Despite all of the above 2 members wanted interest rates to stay put at 5.25%.

Just shows how much of a dark danger inflation is and how difficult a job MPC members have ahead of them.

Comments

[Jo Worc 27 Apr 2008 14:00:06]

How can people say they haven't noticed food prices going up! I shop in Sainsburys and I have notice a rapid increase in most food, and not just by a few pence, by a significant amount. I buy for 5 of us and have notice a big increase in my weekly shopping.

[Khalid 23 Apr 2008 21:11:53]

Sir
With rice being a nice little earner for many a franchise practising the art of stir, at current market prices circa $0.24745 or £0.12372 per pound can't see what all the fluff is about can you?
As we know, the catering industry does spend much of its time in hot water, in real terms the shelf price charged by virtue of many an own label is by far within the realms of tolerence, suffice to say that even with store prices after packaging, delivery and storage come out at record levels themselves.
So, as the question arises are store prices [INXS] of what should be the case, it is understandable why many restauranters are reluctant to pass on the price to the [Hungry] thus avoiding their profits being eaten into.
Thus far as the MPC is concerned, good to see a balanced diet any way! One thing for sure, the powers to be know how to make a pilau of things dont they! Chow Meow and Spring Noodles Please!

[Michael Cornwall 23 Apr 2008 15:12:35]

As a retailer money is very short. But year on year, we might be much the same turnoverwise. I think the reason is we are selling cheaper lines perceived to be good value for money,and our advertising is more direct,previosly we used radio ads now we have returned to local paper.