Calls for Osborne to tackle speculation as food prices rise

UK consumers are paying 3.7 per cent more for food than they did a year ago, leading to calls for the Chancellor George Osborne to tackle financial speculation on food prices. The rise has added more than £100 to the average household’s annual grocery bill.

Inflation figures released today reveal that food prices rose by 1.2 per cent from January to February this year, contributing to the 3.7 per cent annual rise, which is well above the government’s 2 per cent target for overall inflation. [1]

Ahead of tomorrow’s budget, the World Development Movement is calling on George Osborne to back European measures to stop financial speculation by banks and hedge funds driving up food prices. Real incomes in the UK are shrinking and almost a billion people face hunger worldwide, but curbing speculation would help prevent price spikes and would cost the Treasury virtually nothing, says the anti-poverty group.

High prices are also harming British businesses. Premier Foods, owner of Hovis, yesterday announced a £259.1 million pre-tax loss for 2011, partially due to rising wheat prices. The global price of cereals rose by 35 per cent from 2010 to 2011. [2]

Deborah Doane, director of the World Development Movement, said today: 

Treasury ministers repeatedly cite the high price of commodities, which includes food, as one of the reasons people in the UK are facing such hard times. But what the Treasury does not seem to have grasped is that George Osborne can take easy, painless action to tackle financial speculation, one of the major drivers of high food prices.

Regulation to limit speculation is currently on the table in Brussels, but the UK government is actually blocking its progress. If Osborne wants to ease the burden of Britain’s economic woes on ordinary families, and at the same time safeguard the world’s poorest people from the impact of soaring prices, he should put his weight behind effective market regulation.”

[1] Consumer Price Indices February 2012 

[2] FAO Food Price Index