Franky on Finance

Families already struggling to cope with the credit crunch face huge increases in food bills because of global shortages.  Costs are rising faster than at any time since 1991 (when there was a recession driven by sky-high inflation and interest rates) and the average shopping bill is likely to go up by £600 a year.  Added to the impact of higher charges for mortgages, heat, light, water, petrol and council tax, the average family is likely to have to find an extra £1,500 a year, just to stand still.  Worldwide food shortages have been caused by increased demand from countries such as China and India, together with poor harvests linked to droughts and floods. A decision by farmers to turn over their land to the growing of biofuels is also a factor. While biofuels have been presented as the solution to global oil shortages, they are now contributing to a lack of food. Some countries have suffered food price protests, while a number of nations are imposing limits on exports to protect their own supplies.  The big question for British shoppers surrounds the extent to which supermarkets and other retailers will pass on the price increases.  While profits will suffer if they swallow the rises, sales will inevitably fall if they pass them on.