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26/03/2011 - Inflation: Bank Economist warns of “Food Price Unrest in the UK”

SPEAKING on Sky’s Jeff Randall Live programme earlier this month, HSBC economist Karen Ward raised the possibility that Britain could experience riots over rising food prices as have occurred in other parts of the world.

Ms Ward pointed out the way in which wages have not kept up with rising prices saying “Even in the developed world I think we have very, very low wage growth, so people aren’t getting more in their pay packets to compensate them for food and energy, and I think we could see social unrest certainly in parts of the developed world and the UK as well”.  She drew a link between rising food prices and rising crude oil prices: “More and more we are seeing that some of these foodstuffs are actually substitutes for energy itself, particularly biofuels.  So I think the energy markets are a significant contributor to these food price gains”.

Commenting on Ms Ward’s predictions, political analyst Stacy Herbert, speaking on The Keiser Report, argued that attributing food price increases to rising fuels costs was missing the true cause of inflation which was instead the printing of money to bail out the banks.  Host Max Keiser then made the point that workers should seek to have their wage levels based on the rate of the increase in the money supply rather than the CPI or inflation if they wanted to see their wages increase truly in line with prices.

For most of us these economic debates are not something that we give a lot of attention to.  What matters to us is that when we visit the shops we find that the prices keep rising while our wages just don’t keep pace and thus our real standard of living is dropping.  Instead of propping up the banks the Government should be paying more heed to bringing prices down to ease the burden on ordinary working Britons.  Then we will hopefully be spared the kind of civil disturbance that Ms Ward predicts.