Belfast Telegraph

Blistering sun casts a shadow over food bills

By David Elliot

Keeping your feet shod and your back clothed has become a lot cheaper. UK inflation fell to 2.4% last month - not a million miles away from the Bank of England's 2% target - mostly led by a sharp drop in shoes, clothes, fuel and food.

Good news then for consumers everywhere, particularly if you like walking, keeping warm, driving and eating.

However, the latter pastime might not prove to be as cheap in the months ahead and, ironically enough, that's because one of the world's biggest farmers, the US, has been getting too much of something we've been craving: the sun.

While we've been getting drenched by the kind of showers which seem to have become a permanent fixture around these parts in July, the US midwest has been burning up under a blistering sun.

That would be a welcome relief, you might think, but when your crop depends on a fair amount of rainfall to keep it healthy then too much of what appears to be a good thing can quickly lead to a disaster.

In this case it's the wheat and corn crop which has suffered, prompting analysts to mark expected yields down by as much as half of what mid-west farmers would normally produce.

That might not seem like a big worry for you and me when we go to do our weekly shop but because the US wheatbelt contributes such a large percentage of world grain supplies it will eventually hit our pockets.

The Food and Agriculture Organisation has already had to cut its expected grain output by 23m tonnes because of the drought. Such news has already pushed prices sharply higher on futures market to levels not seen since 2007/2008 and, after a lag, these will make the price of your loaf of bread or morning corn flakes climb too.

But that's not all. Because both wheat and corn are used to feed our livestock, these latest bull runs will be aptly named, also impacting the price of beef, pork, lamb and chicken.

So while the Bank of England will be glad to see the UK inflation rate coming down, the relief will be shortlived as food prices start heading north.

One factor it can continue to enjoy is the fact that energy prices remain low, hit by the prospect of lower demand. If only oil companies would pass on the fall in a barrel of crude to the forecourt pumps, something they're only too happy to do when crude prices rally.