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Tuesday 20th May 2008
If you believe the government inflation figures then you might expect food inflation to be running at anything up to 4%. In reality we have seen a whole basket of food products show double digit growth over the last twelve months as increased oil prices and raw material costs start to kick in. So can food inflation really impact upon the UK economy?
The problem with the UK economy is the fact that the country imports more food than it exports, putting the country in danger should worldwide food prices continue to rise. This net import of food has not been helped by the weakness of sterling which has meant more money being spent on food than last year – even before the price rises.
The rise in food costs will impact upon the economy at some stage and as well as drawing money out of the system it will put families and businesses under renewed pressure. We need to remember that the world population is set to increase over the next decade, living standards are increasing in many parts of the world and countries such as China have woken up from their slumber.
The world is a very different place than it was prior to the year 2000 and raw material costs are set to rise even further in the short term. |
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