Food prices rise by 7% in one year

A recent report has shown that food prices have soared by around 7% in the space of one year, adding further strain on already stretched household finances.

This has increased concerns over inflation levels rising even higher. Foods such as meat have risen in price by around 8.4% according to recent figures, and staple foods such as cereals, pasta, and rice have gone up by just over 5%.

Food prices have been soaring even though supermarkets have been declaring price wars in order to try and attract customers back after they have turned to cheaper discount stores in order to save money on the cost of their grocery bills.

Consumers are already suffering due to rising fuel bills, energy bills, and living costs, and these increased prices are set to make the situation even worse, as families struggle to cope with their high weekly or monthly grocery bills.

Gordon Brown recently announced that an agreement with international tariffs and subsidies could help to slash family grocery bills by around £200 a year. However, officials stated that there was no sign of this agreement at the G8 summit in Japan.

Many economists predicted before the last Monetary Policy Committee Meeting that interest rates would remain unchanged, partly due to rising food prices.

Before the meeting one economist said: ‘The market jump in shop prices reinforces the belief that the Bank will keep interest rates unchanged, even though the economic downturn is deepening and recession is becoming a very real danger. ‘

He added: ‘Indeed, the Bank remains trapped between the rock of rising inflation and the hard place of markedly slowing economic activity. However, given current inflation levels and risks, the Bank of England may well be reluctant to cut interest rates until 2009 unless the economy really falls off a cliff.’