November 4, 2010

Britain's food prices hike due to high wheat, corn costs

A sharp rise in the cost of wheat and corn led to the biggest increase in Britain's food prices for more than a year last month, an industry body said yesterday.

The British Retail Consortium (BRC) warned that more increases were on the way due to higher VAT in January and because many retailers have been shielding consumers from price hikes.

It said food prices in October were 4.4% higher than a year ago, the highest annual increase since June 2009, after a 47% jump in the cost of wheat and a 61% rise in the cost of corn drove up a host of staples from bread to meat.

BRC economist Richard Lim said that some of the commodity price rises were "still in the pipeline" and expects more increases in food prices on supermarket shelves.

"We are probably going to see food price inflation continue to rise for the next few months but we don't expect it to reach the levels it did in 2008," he said.

Wheat prices have soared as a result of poor harvests in several countries, including Russia, which banned its export, he added.