Banks to blame for price rises of coffee, chocolate and bread

* New report: Gambling by banks like Goldman Sachs increased food prices

* UK must 'back, not block' new banking reform in Europe, say campaigners

* Over 800 people have pledged to call the FSA to demand action to stop banks gambling on food

Today banks have come under fire for risky and secretive gambling on coffee, cocoa and wheat which is playing havoc with prices.

Lovers of chocolate spread on toast with a cup of coffee in the morning face paying more for their breakfast as prices have rocketed on the international markets.

The same banks, secretive hedge funds and dangerous speculation that caused the sub-prime mortgage crisis and global financial meltdown are also causing food prices to rise massively, argues new research from anti-poverty campaigning group, the World Development Movement.

Cocoa prices have reached their highest levels for 33 years, increasing by 150 per cent over 18 months which could force some chocolate makers to raise prices and in some cases use less cocoa.

Although poor harvests acted as the initial trigger for price rises in cocoa, the finger is being pointed at hedge funds and big investment banks like Goldman Sachs for making the situation much worse by speculating on food. The World Development Movement estimates that last year Goldman Sachs made $1 billion of profits from speculating on food.

Last month, the price of coffee jumped by 20 per cent in three days, after a trader called the bluff of hedge funds that had been raking in millions from selling coffee contracts and betting on the price to fall. This left hedge funds scrambling to buy actual coffee beans, and the price shot up from the extra demand.

A new financial reform law was passed in the USA at the end of last week which will help to prevent this kind of speculation. But here campaigners are worried that the UK government could move to block similar reforms proposed in Europe because of the strong banking lobby in London and Brussels that lobbies hard against regulation.

The World Development Movement warns that unless urgent steps are taken by the government to clamp down on the banks, prices could get out of control. This is likely to drive up inflation in food prices in Britain, leaving people on low-incomes out of pocket. And also the price rises could cause hunger and spark major civil unrest in poorer countries, such as the food riots seen in Haiti, Mexico and Bangladesh in 2008, when world wheat and maize prices reached unprecedented highs.

The campaigners are encouraging people to complain about Goldman Sachs and other banks making profits from gambling on food and causing inflation and hunger to the Financial Services Authority, which regulates bank behaviour. Over 800 people have already pledged that they will call the FSA this week to register their complaint and to call for action to stop speculation on food.

Deborah Doane, director of the World Development Movement said:

"Investment banks, like Goldman Sachs are making huge profits by gambling on the price of every day foods. But this is leaving people in the UK out of pocket and the poorest people in the world are starving.The EU must follow the example of America and crack down on banks' reckless gambling, and the UK government should take the lead in tackling this issue.

"Nobody benefits from this kind of reckless gambling except a few City wheeler dealers. British consumers suffer because it pushes up inflation, British companies suffer because of unpredictable oil and raw material prices, and the world's poorest people suffer because basic foods become unaffordable. The City of London is one of the world's largest financial centres, and the government must make sure our regulators are serious about cracking down on dangerous speculation."