Unemployment international comparisons: Economic indicators
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Food prices have hit historic peaks in the last few years. This note sets out recent trends internationally, UK policy responses and the follow through to UK prices and spending habits.
Food Prices and Affordability (211 KB , PDF)
Food commodity prices have hit historic peaks in the last few years and the underlying causes are underpinned by longer term supply and demand trends. There have been three big price spikes in the last five years suggesting a trend in rising prices. This brings to a close a period which started in the 1970s in which the real price of staple crops (rice, wheat and maize) fell year after year. Most commentators are now speculating that it is the end of the cheap food era – in the medium term at least.
A number of factors have come together to bring about the recent price spikes and overall rising prices but their contribution is variable and the relative impact of each factor is hard to determine. In general, they relate to unfavourable conditions in some major producing countries leading to less than expected harvests against the background of the continued moderate growth of demand. In addition, previous export barriers have added uncertainty and driven prices for wheat higher.
In the UK, all foods have risen in price since 2007 with processed foods and fruit showing the biggest increases. Charities have reported a 100% increase in the use of food banks in 2012. The UK policy response is to work at international level, with the G8 and G20, to address food price volatility and to discourage inappropriate reactions to market events such as the use of export bans. At domestic level, the Government has said that it is “highly attuned” to the need to increase high-quality food production domestically to ameliorate some of the impacts of high food prices that are due to global and domestic supply.
A 2011 Foresight report on food and farming noted the difficulties of formulating a policy response to food price volatility without distorting markets and suggested that food affordability issues were best dealt with by creating safety nets for those most impacted.
Food Prices and Affordability (211 KB , PDF)
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