I had a fast verify of some key meals costs on worldwide markets on account of feedback left on this weblog with regard to inflation this morning.

This information comes from Buying and selling Economics:

The chart is of US wheat costs. I stress that I do know that we use little US wheat, however wheat is traded globally, as are most of the commodities famous within the desk on the backside.

There’s one completely constant characteristic to be famous inside that desk. It’s that some completely primary meals costs are down closely on worldwide markets during the last 12 months. The typical fall in costs exceeds 20%.

Regardless of this, what we’ve got realized as we speak is that meals costs within the UK are up 19% in a 12 months, with bread, olive oil and milk being central to this, despite the fact that all of them have seen their bulk wholesale costs fall dramatically.

I’m, after all, conscious that meals producers purchase ahead. In different phrases, most of the uncooked supplies that they’re utilizing at current had been purchased at larger costs set someday within the final 12 months. Nonetheless, simply as world oil and gasoline costs have now fallen considerably, so have meals costs, and it’s due to this fact totally cheap to anticipate three issues.

The primary is that the Financial institution of England takes this reality under consideration when appraising inflation expectations. If meals costs are supposedly now driving inflation, then it’s totally cheap to anticipate that inflation will fall considerably and shortly exactly due to the decline in bulk meals costs. Why is that risk not being mentioned?

Second, why aren’t main retailers discussing this, and the implication that it’s going to have on their very own worth constructions over coming months?

Third, why is the emphasis solely on these commodities the place I settle for that international costs have gone up, together with sugar? Is there some form of conspiracy to solely talk about the unhealthy information?

I believe we want solutions to these questions.

And earlier than you say it, the reply isn’t all the way down to power prices. This desk exhibits the motion in these during the last 12 months: