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Associated British Foods suggests food inflation may soon peak

The news for the Bank of England and the government seems to be getting better today with Associated British Foods suggesting that food inflation may soon be about to peak as the fall in the price of oil starts to filter through the distribution chain. So is this the turning point? Can we now expect the markets to pick up?

As they say in business, one swallow does not make a summer, so don't expect a sudden rush of enthusiasm in the market just because we have seen a couple of upbeat announcements (this and the factory output price data). However, keep a very close eye for the combined impact which any similar announcements will have over the next few weeks.

While the main problem with financial markets at the moment is a lack of capital there is also a major issue with consumer confidence. If this confidence were to pick up then we would see an increase in business levels which would then increase liquidity and hopefully turn the economy around. Never under estimate the power of consumer confidence because without it the economy will never recover.

However, quite when the turnaround will happen remains to be seen!

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