Thursday, Nov 27, 2008
Food inflation will be 3.5-7% next year
NY Times: Food Prices Expected to Keep Going Up
[USA data contradicts predictions of 0% inflation for next year]. "The Agriculture Department is forecasting that food prices will increase 3.5 to 4.5 percent in 2009, compared with an estimated 5 to 6 percent increase by the end of this year. Some economists project even steeper increases next year up to 7%. A reason that overall food prices are expected to continue increasing is the lag between price increases for basic commodities and for finished food products in the grocery store, particularly for meat and processed foods.
“For the last 21 months, food manufacturers, restaurants and livestock producers have been absorbing significant costs that in my view are likely to be passed on to consumers in 2009 and beyond,” said Mr. Lapp, a former chief economist at ConAgra Foods.
12 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. mountain goat said...
Food inflation to slow slightly in 2009 but still prices going up
2. rickyb said...
I'm a little sceptical of the BOE's inflation (or deflation) forecasts. You can't have GDP growth and a reduction in energy consumption without inflation. With energy consumption currently dropping at around 2% p.a., any attempt to get GDP growth back in positive territory is bound to be inflationary, unless the country starts to increase its energy consumption very soon.
3. phdinbubbles said...
You don't think our government could be lying to us about deflation and their real motive in dropping interest rates is to resuscitate house prices? Did they not read the DNR on the notes? What's the point of keeping it alive for another painful 6 months? Oh yes, an election.
4. planning4acrash said...
Our government lie about everything. Inflation is increase in the money supply, deflation is reduction in the money supply, all other things are part of the overall implications of the altered money supply. What you should know about inflation.
5. alan said...
I don't think RPI will go below 1% in the next 6 months.
My gut feel . Any views?
6. rickyb said...
An increase in the money supply will cause inflation, but only if it does not go towards infrastructure or capital growth, both of which would increase energy consumption.
7. stillthinking said...
Food is up 10% on last year. I don't think food is going to get cheaper.
8. planning4acrash said...
My food costs have fallen 75% by choosing Farmer's markets. Food is not more expensive, the pound is worth less, so imports cost more, and we import much of our food.
9. Kruador said...
I think there are two factors. First, food prices have been high because the commodities futures markets have been overwhelmed by price speculators. As all other bad trades are unwinding, commodities trades have had to unwind too (the markets are structured in a way that does not require the commodity to ever be delivered). See for example http://futures.tradingcharts.com/chart/CW/W for wheat futures - spot the fall from April to now, both in price and in open interest. http://futures.tradingcharts.com/chart/CW/M shows the bubble from - guess when - 1999 to 2008.
Secondly, the inputs to food production are primarily fuel for farm machinery, artificial fertilisers (which are based largely on steam reforming of natural gas to produce ammonia for nitrates), and a small amount of human work. The input prices are locked in when the land is ploughed and seed sown, and fertiliser laid. These prices will reflect the cost of crude oil and natural gas at that point. These have been falling and are continuing to fall. (Natural gas is now below the level it was before the 'shock' caused by the disclosure of Norway's leaky pipe.)
In summation, they're completely wrong. Food prices should fall back to their long-term averages as the credit that caused the bubbles is wiped out.
10. This comment has been removed as it was found to be in breach of our Blog Policies.
11. This comment has been removed as it was found to be in breach of our Blog Policies.
12. This comment has been removed as it was found to be in breach of our Blog Policies.