Thursday, Aug 24, 2006

More Inflation pressures building!

Telegraph: Price of food and drink will soar, experts predict

On top of soaring fuel bills, petrol prices and council tax, retail experts issued a warning yesterday that the cost of food and drink was about to go up sharply.

Supermarkets are expected to pass on higher prices to customers after a combination of poor harvests and the rising cost of global commodities such as orange juice and coffee.

Drink up: The cost of orange juice is expected to rise by up to 25 per cent over the next few months. The cost of food has been rising substantially this year. The British Retail Consortium said food prices went up in July for the third month in a row. In the 12 months to July, food inflation was 3.2 per cent compared with the overall inflation rate of 2.4 per cent.

Posted by tyrellcorporation @ 08:20 AM (493 views)
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8 Comments

1. Onyerhike said...

Look forward to sipping my orange juice in my bargain price semi next year (=:

Thursday, August 24, 2006 09:15AM Report Comment
 

2. Bfskinner said...

IR rise in september anybody?

BFS

Thursday, August 24, 2006 09:33AM Report Comment
 

3. Thesqueeze said...

Interesting how the article never mentions the 'I' word. Inflation.

Thursday, August 24, 2006 10:07AM Report Comment
 

4. paul said...

There will be a rise in September. That's my prediction.

Perversely, these rises might not affect the inflation statistics much, because as we all know, champagne, DVD players and players play a much more important role in the economy than bread, milk, housing and petrol.

In fact:

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/08/16/cncpi16.xml

Thursday, August 24, 2006 10:58AM Report Comment
 

5. inbreda said...

Very true Paul.

Perhaps this means that whereas, in the past, a 4% rise would have brought inflation down, perhaps by modern measures it will require a 15% rise.

More likely is that they will change what is in the basket of goods to things which they KNOW are going to reduce in the near future, thus fiddling the stats from both sides.

Thursday, August 24, 2006 02:05PM Report Comment
 

6. P. O. O. R said...

My guess is an Inflation rise in September, and then another in November or December - My guess is that it will reach 6 percent before the end of next year, it might go even higher. Maybe within the next three years we will see it back up higher than 8 percent. I wonder how many people will say that cannot happen! As so many have said the next 18 months is going to be very interesting.

Thursday, August 24, 2006 04:48PM Report Comment
 

7. paul said...

Another fiddle will make a lot of economists scratch their chins and conslude the MPC doesn't know what it's doing.

No, far more likely perhaps is as you hint breda, that the rate rise will need to be much higher to impact inflationary rises. However, if spending is based on house price rises being MEWed away, then the desired effect might come about anyway ... ?

I want to know how unemployment affects inflation. What is the causal relationship? Can anyone enlighten?

Thursday, August 24, 2006 08:47PM Report Comment
 

8. uncle tom said...

''I want to know how unemployment affects inflation. What is the causal relationship? Can anyone enlighten?''

- Rising inflation tends to cause unemployment, as it causes interest rates to rise, and with that, reduces the willingness to spend, invest, and take on debt.

- Rising unemployment tends to moderate inflation, as the spare capacity in the labour market reduces the cost of labour.

While these influences are significant, one should not over-estimate their impact however.

Thursday, August 24, 2006 09:07PM Report Comment
 

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