Chinese inflation hits 4.9% pushed by high food prices
Governments and central banks see food price growth as one of the main economic risks
15 February 2011 Last updated at 05:21 http://www.bbc.co.uk/news/business-12461138
Inflation in China has accelerated in January despite three interest rate rises in the past four months.
Consumer prices rose by 4.9% in January from a year earlier, the National Bureau of Statistics said. In December, the annual figure was 4.6%.
China, and other Asian nations, are battling high food costs. The January figures showed food prices up 10.3%.
Inflation is a concern in China where poor families spend up to half their incomes on food.
January's figure was less than many economists had predicted, but close to November's 28-month high of 5.1%.
Moving on up
Adding to inflationary pressure are factors such as a drought in China's key wheat-growing regions, as well as a rise in global commodity prices.
"The government is battling with all sorts of problems coming from every front," said Jinny Yan, an economist from Standard Chartered
"The peak of inflation is yet to be seen."
Analysts said that an increase in producer prices also highlighted the problems China was facing.
Producer-price inflation accelerated in January to 6.6% from a year earlier, and compared with 5.9% in December, the statistical office figures showed.
In an attempt to rein in price growth, the central bank last week raised its main interest rate to 6.06% from 5.81%.
Some analysts say borrowing costs are set to rise further in coming months.
"Inflation pressures are still very evident," said Jonathan Cavenagh from Westpac in Singapore.
"The PPI firmed to 6.6% and non-food inflationary pressures continued to rise. So I would still expect to see tighter policy in coming months."
The National Bureau of Statistics also announced changes in how it calculates consumer price inflation.
Housing has now been given a much larger share of the new consumer price index (CPI) basket, and food prices have been given less weight, it said.
Volgens de Wereldbank liggen de voedselprijzen momenteel gemiddeld bijna een derde hoger dan een jaar geleden. Daarmee benaderen ze de recordniveaus die in 2008 wereldwijd voor veel problemen zorgden, aldus de ontwikkelingsbank. De prijs van graan is het afgelopen jaar verdubbeld. Die van maïs nam met bijna driekwart toe. Ook andere belangrijke dagelijkse ingrediënten, zoals groente en bonen, zijn in veel landen aanmerkelijk duurder geworden. Dankzij goede oogsten in Afrika en de slechts bescheiden prijsstijging van rijst is de situatie momenteel echter nog niet zo nijpend als in 2008, stelde de Wereldbank.
Voor de boeren zijn de prijsstijgingen wel goed, noodzakelijk zelfs:
Jim Rogers: juist hogere voedselprijzen nodig
Dat zegt investeerder Jim Rogers in een interview met RTL Z. Speculanten nemen geen grondstoffen af, je kunt hen de schuld van de hogere prijzen niet geven. Ook vindt hij dat hoge prijzen juist noodzakelijk zijn. "100.000-en boeren in India hebben zelfmoord gepleegd omdat ze niet rond kunnen komen."
Jim Rogers was dinsdag te gast bij RBS. Traditioneel gezien geeft hij dan zijn visie: koop commodities. 4 jaar terug kwamen er 200 mensen naar zijn visie luisteren. Dit jaar waren dat er al 2.000. Commodities stijgen in prijs, en worden blijkbaar steeds interessanter als belegging.
Rogers richtte ooit samen met George Soros het Quantum Fund op. In de eerste tien jaar steeg dit fonds met meer dan 4000%. Na dit succes verliet de toen 37-jarige Soros de wereld van de hedge funds om wereldreizen te gaan maken en om verschillende boeken te schrijven. De nu 69-jarige kwam gisteren met een aantal sterke analyses en aanbevelingen. Velen zijn wel bekend, maar hieronder een samenvatting.
"Zo'n 3 miljard mensen in India, China en Vietnam willen leven als wij, dat geeft een dramatisch effect voor de vraag naar commodities (grondstoffen). Rogers stelt daarbij dat als de wereldeconomie aantrekt dat je dan commodities moet hebben, die zullen nog flink in prijs gaan stijgen. En als het niet beter wordt met de kredietcrisis dan zal de wereld geld blijven drukken en dan moet je júist ook commodities hebben. De prijs van voedsel zal de komende 10 jaar hard blijven stijgen, net als commodities. De vraag stijgt en het aanbod blijft achter."
Een tip voor de bezoekers: "leid je op tot boer en leer tractor rijden. Mijnbouwers en boeren zijn weer in beeld. Niet de stockbrokers, zij zullen de nieuwe taxichauffeurs zijn. In Amerika is de gemiddelde boer 58 jaar. Niemand wil meer 12 uur per dag werken en dan weinig geld verdienen.
Daarom moeten de prijzen voor voedsel wel stijgen. Om boeren uit India, Afrika en zelfs Amerika een levenswaardig bestaan te gaan. Anders stoppen ze met produceren en hebben we uiteindelijk niets."
Goed voor boeren
"12 uur voor niets werken dat houdt niemand vol. Het is dus niet erg dat speculanten de prijs van voedsel (tijdelijk) omhoog zetten. Dat voedsel duurder wordt is niet erg, dat moet je niet reguleren met een maximum voor prijzen. Het is goed voor de boeren. De termijnhandel in voedingsmiddelen moet je zeker niet verbieden, dat werkt altijd averechts."
"Dat het voedsel duurder wordt geeft wel een groot probleem: mensen worden sneller boos als bijvoorbeeld graan en rijst duurder worden, dan als koper duurder wordt. Er komt meer onrust in de wereld doordat voedsel nog veel duurder gaat worden. Een tekort aan commodities kan leiden tot oorlog. Een oorlog is overigens nergens goed voor, vertrek meteen uit land waar oorlog is, maar het is wel goed voor de prijs van grondstoffen."
" We hebben nu een bull market in commodities. De verhouding tussen vraag en aanbod is 'out of balance'. Als je kijkt naar olie: er zijn geen grote olievelden gevonden in de afgelopen 40 jaar En alle bestaande grote olievelden dalen hard in produktie. Zelfs als de vraag tegenvalt komen we nog aanbod tekort. Landen als China, Groot-Brittannië en Indonesië waren ooit exporteurs van olie. Nu zijn ze importeurs. Voor olie geldt: 'meer vraag en minder aanbod zorgt voor hogere prijzen."
The G20 is to hold a two-day meeting against a background of rising food and commodity prices.
Finance ministers and central bankers from 20 of the world's biggest developed and developing nations will gather in Paris.
They are being urged to tackle the issue of price inflation affecting basic goods, like food and fuel.
Ahead of the meeting the International Monetary Fund warned that these have increased economic imbalances.
Earlier this week, the World Bank said food prices were at "dangerous levels" and had pushed 44 million more people into poverty since last June.
John Lipsky, first deputy managing director of the IMF, told the BBC that the G20 needed to work to remedy the instability: "There is great concern over the obvious high volatility of basic commodity prices especially food."
French President Nicolas Sarkozy, who is currently the head of the G20, has argued that commodity speculators should be reined in in order to reduce food price spikes and volatility.
Meanwhile, more than 100 European and international organisations led by the World Development Movement (WDM) have signed a statement warning the G20 of what they see as the dangers of unchecked speculation.
Julian Oram of the WDM said: "By taking action now to curb excessive speculation on food, G20 leaders could save lives, reduce chronic hunger and prevent civil and political unrest."
Rapid food price inflation in 2008 sparked riots in a number of countries. At that time, the World Bank estimated 125 million people were in extreme poverty.
The World Bank also called on this week's G20 meeting to address the problem, saying in a report that rising food prices were an aggravating factor of the unrest in the Middle East, although not its primary cause.
Some analysts have pointed to the difference between speculation, which can provide up-front money to a farmer to plant new crops, for example, and market manipulation, which is designed purely as a play on prices.
Currency and trade
Mr Lipsky said the market for food and other basic commodities was heavily burdened by controls and subsidies: "I think it would be very useful for the G20 to look at these markets in much better detail and see if they can be improved to better serve the global community and not be a source of instability and worry."
Other key imbalances on the menu will include currency and trade.
Mr Lipsky said that the idea was that some of the fast-growing "surplus" countries, like China, whose exports far outweigh its imports, have been relying too much on exports to fuel growth, while deficit countries, like the UK and the US, who buy in more than they export, rely too much on domestic demand to fuel their growth.
Currency values are at the heart of this, with critics arguing the Chinese keep their currency artificially low to make its exports more attractive.
China denies this.
Although G20 countries have been working for some time on how to correct mismatches in the global economy they have not reached agreement even over what criteria they should use as a starting point.
Summit host Christine Lagarde, the French finance minister, said her focus was going to be on finding those criteria: "What we want to achieve Friday and Saturday is to identify a list of indicators, measuring tools, that will allow us to identify imbalances, then the causes of these imbalances, so that we can propose methods to coordinate our economic policies."
The list includes countries' trade deficits or surpluses, budget deficits and levels of debt.
Iraq has been facing a myriad of problems, from a totally demolished infrastructure after eight years of US occupation to rising food shortages and a stubborn insurgency. They also are facing the prospect of life after that occupation, with the US pushing them to build a massive military to replace the US forces.
Beyond that, protests have been growing across the country, with protesters hammering the religiously dominated government blocks for corruption and a total lack of basic services, in the face of a rising budget deficit.
So it came as something of a surprise when the Iraqi government took what was a shockly rational measure, announcing that they are shelving a contract to buy a collection of US-made warplanes meant to build an Iraqi Air Force, and are instead buying food.
The US has been insisting Iraq is “at risk of air attack” without an Air Force, though the country doesn’t really have any enemies (at least not the sort who have Air Forces to attack with). The decision to delay the deal will probably spark an angry rebuke from the US, and from whichever arms dealer was set to make those warplanes.
On the other hand, Iraq has one thing that’s very real, and that is hunger. It seems difficult to fathom that the Iraqi government noticed that, even in the face of public protests, but for the six million Iraqis dependent on food rations to survive in the waning days of the occupation, it will likely be a welcome decision.
The two-day ministerial meeting of the G-20 nations beginning tomorrow in Paris, now has coming to the table the topic of the deadly menace of food-commodity hyperinflation, not previously on the agenda. Indonesia, for one, is demanding action against speculation. In opposition, comes a chorus of defenders of "markets," including even Cargill and the Chicago Merc directly.
Lyndon LaRouche this week put it simply: Slap a cap on food prices, now!
"We want the G20 forum to put pressure [on the markets] so there would be no speculators, or any financial or non-financial industries, who speculate on food commodities," said Indonesian Finance Minister Agus Martowardojo, reported by The Jarkarta Post today, on a briefing given to reporters in Jarkarta yesterday, before Agus departed for Paris. ". .at the G20 level, for the long-term, we want the countries to pool funds in one specific fund to increase food productivity, but for the short term, we must deliver the message to financial and non-financial industries which speculate on food prices, as well as futures trading industries, so they do not destabilize prices."
Indonesia, with 250 million people, the fourth most populous country in the world, suffered crop losses from bad weather in 2010, and is rocked by food hyperinflation across the board, from rice to chilies.
Too bad, but 'don't touch the markets,' is the message from Cargill, and others of the global agro-food cartel, including from their government flunkey officials in the Obama Administration and in London. Paul Conway, Senior Vice President of Cargill, the world's largest agro-company, and completely private, was quoted in a defend-the-killer-markets review in today's Wall Street Journal: "'Speculators are always an easy target, but speculators didn't cause food prices to rally in the second half of 2010,' he said. 'The more you have different types of players trying to use the derivatives markets, the more they reflect the true price of the commodity.'" Conway insists that blame be restricted to bad weather and natural disasters.
Likewise, a spokesman for the Chicago Mercantile Exchange itself (now the CME Group), David Lehman, responsible for innovating new futures betting opportunities, is speaking out that blame for food-price volatility is to be placed on too much "demand growth," and lack of "transparency" in emerging markets.
Prime Minister Nicholas Sarkozy, host of the Paris meeting, and rotating chair for this year's presidency of the G20 and G8, has said that food-price inflation will get special attention, with a meeting in June; and there is talk of a "working group" to be commissioned this weekend.
All measures show food speculation volume going off the charts. According to European Union data, non-food "investor" players in commodities increased their involvement in markets from $15 billion in 2003, up to $300 billion in 2008, and now that figure is soaring to the sky.
Lyndon and Helga LaRouche have recently demanded a global approach to controls on food prices, emphasizing that much of the world's hyperinflation in food prices is due not to the food, but to Wall Street and related speculators, speculating up the food prices. What is necessary today is emergency price caps on food internationally, and a long-term reversion in food policy, eliminating the failed free trade system, and re-instituting food security measures like reserve stores that prevent the situations where nations must go hungry. In this context look at where Mexico stands, caught in the failed global system of monetarism and free trade.
Frosts in Mexico's northern, and most agriculturally-productive states, have had catastrophic effects on crops, leading farm and peasant leaders, as well as legislators, to warn that resulting food shortages and high prices could cause a social explosion. Senators from several parties are calling on the Calderon government to act immediately to control food prices, to guarantee that people will be able to eat.
Hit particularly hard were the states of Sinaloa and Sonora, and to a lesser degree Chihuahua, Durango, Coahuila, and Leon. Keep in mind that these states of Northern Mexico would be the immediate beneficiaries of NAWAPA's construction in the U.S.
Most severely affected were the major irrigated land areas with crops planted for the 2010-2011 Fall-Winter season. In Sinaloa, an estimated 500,000 hectares sown with white corn, the key ingredient for tortillas, the main staple of the Mexican diet, were destroyed. In total, 600,000 hectares, out of a total of 800,000 irrigated hectares of crops, were wiped out. Any way you look at it, this is a national calamity, said PRI Sen. Cruz Lopez Aguilar, chairman of the Senate Agriculture Committee. The damage translates into a reduction of 4.5 million tons of white corn, not to mention the loss of income, and higher prices of tortillas and other vegetables that are the mainstays of the Mexican diet.
In Sonora, frost destroyed 113,000 hectares—500,000 tons—of wheat, and 50,000 hectares of produce. Sen. Lopez Aguilar sadly reported that the two states that are major exporters of produce—Sinaloa and Sonora—will not be this year. Mauro Jimenez, president of the Jalisco Agriculture Council, reported that just in the last week, prices of foods such as tomatoes and chiles have almost doubled, as a result of damage to these crops, as well as of speculation and hoarding. He predicted that in the next three weeks, the prices of tomatoes, chiles, potatoes, peppers, beans and corn will rise dramatically; crops that weren't damaged will quickly be consumed, resulting in shortages. Prices will hit "historic" levels, said Rafael Barrios, president of the Businessmen's Market Supply Union (UCMA).
They already have. According to the Independent Agriculture Workers and Peasants Union (CIOAC), between June of 2010 and Feb. 14, 2011, the price of a kilo of garlic rose by 19%, squash by 4%, onion by 25%, carrots by 113%, eggs by more than 4%, papaya by 47%, bananas by 37%, and tomatoes by 80%. CIOAC Secretary Federico Ovalle Vaquera pointed to the 56% increase in the price of a liter of milk, the 100% increase in the tortilla price, and 79% increase in the price of beans during the same timeframe—all products that are part of the daily Mexican diet.
The Wall Street and City of London-led food speculators have now made almost one billion people around the world chronically hungry. This does not include another billion or so who are undernourished, due to lack of adequate food.
Robert Zoellick, World Bank president, said on Feb.15 that the rise in food prices had already pushed an additional 44 million people into extreme poverty, which is closely associated with hunger.
"The trends towards the one billion are worrisome. Global food prices are rising to dangerous levels. The price hike is already pushing millions of people into poverty and putting stress on the most vulnerable, who spend more than half of their income on food," Zoellick added. Beside expressing his concerns, however, he did not say what is necessary to be done in order to reduce the chronically hungry mass.
A proposal to stop further rise in food prices came from the Indonesian Finance Minister Agus Martowardojo, who told Reuters, ahead of a trip to a G20 meeting: "Indonesia wants the G20 forum to be able to put pressure, so there will be no speculators — the financial and non-financial industry who speculate on food commodities".
Indonesia, with a population of 230 million, produces enough food for the population but has no reserves. The country has also a very large number of people who spend almost 80-90 percent of their earnings in buying food for their families.
Lyndon LaRouche, when briefed on yesterday's food riots in Bolivia, the wheat price shock hitting the Maghreb, Egypt, and other crises, issued the policy call: slap controls on food prices now! "What we do need to have, we need to have a limit, a protection, a control of food prices."
He said, "We need to slap a control on it now. Now the point is, what happens is, the food price increase is a matter of absorption of hyperinflation. The food is not causing the hyperinflation, it's Wall Street!
"So what we simply say, is that we have to put a ceiling on food prices at the wholesale and retail level. We have to look very carefully about the movement of food—the food as used as financial speculation medium. This is the current issue of the day. We need an international ceiling on food prices. We need a freeze on food prices—a cap—now! And the Egyptian and the Tunisian situations are the warning.
"That means, of course, that financial institutions are going to go belly-up. So what! Who cares! If a food-price ceiling causes the bankruptcy of financial speculators, that helps to solve the problem, by eliminating a problem.
"That's the kind of view we have to take. That corresponds to what the lesson is of Tunisia and Egypt. A ceiling on food prices. And also drastic, draconian bans—measures—against anybody who manipulates the market, moving food from one place to another, causing starvation, but allowing people to get a profit on food price increases.
"We need a cap on food prices. And enforcement on the way that there is speculation on food prices. There is speculation on movement of food. We need this urgently."
Brazil, the world's biggest coffee producer, is holding out for even higher prices before releasing stocks the government amassed a year ago, the country's top coffee official told Reuters in comments that could lend fresh support to the biggest rally in 14 years.
Despite tightening supplies which have caused global coffee prices to double since last summer, Roberio Silva expects prices to remain at their current level with few prospects for a rapid rise in global output.
"When the market warrants it, obviously we will consider (selling), but not at the moment," said Silva, Brazil's candidate for the next executive director of the International Coffee Organization (ICO) that will be chosen this year.
Brazil has an estimated 1.2 million bags of exportable 2009 arabica in storage, supplies originally purchased in early 2010 at around $180 per bag to prop up prices when coffee futures were trading at half what they are today.
These coffees now showing an implied paper gain of nearly $240 million U.S.
While that's equivalent to just about three per cent of what Brazil shipped last year, the immediate injection of those supplies would go some way to easing tight supplies that could run short in 2011/12 with one analyst forecasting a deficit.
New York May arabica coffee futures continued to climb on Friday after ending at a 13-3/4 year high on Thursday.
CoffeeNetwork, a coffee information company, last week estimated global output in the 2011/12 international crop year at around 131 million 60-kg bags.
That would fall short of expected demand for 135 million bags.
More than a dozen traders, analysts and producers interviewed by Reuters in January predicted, on average, a tight but close-to-even supply and demand balance.
Silva also dismissed the idea of providing government incentives for growers to increase output, that he said could foment a whiplash collapse in prices and backfire on growers -a policy that may threaten to constrain further growth.
"We won't entice anyone to take decisions that could require a bailout later," Silva said.
He said it was down to the individual farmer to decide whether and by how much to expand his production.
Analysts say global coffee production is failing to keep pace with rising consumption. The world's No. 2 arabica producer, Colombia, has had a run of disappointing harvests and Brazil is heading into a smaller "off-year" crop in 2011.
Brazil's crop supply agency Conab estimated in January the forthcoming 2011 harvest at 41.9 million to 44.7 million 60-kg bags, down from last year's 48.1 million bags. Silva said he had received good feedback on the crop's development since then.
TOKYO - North Korea recently took the unusual step of begging for food handouts from the foreign governments it usually threatens.
Plagued by floods, an outbreak of a livestock disease and a brutal winter, the government ordered its embassies and diplomatic offices around the world to seek help.
The request has put the United States and other Western countries in the uncomfortable position of having to decide whether to ignore the pleas of a starving country or pump food into a corrupt distribution system that often gives food to those who need it least.
The United States, which suspended its food aid to North Korea two years ago amid concerns about transparency, "has no plans for any contributions at this time," said Kurt Campbell, the State Department's top East Asia official.
Meanwhile, the U.N. World Food Program, responsible for much of the food aid in North Korea, said its current food supply could sustain operations in the communist country for only another month.
"We're certainly hopeful that new donations will be coming in the upcoming weeks," said Marcus Prior, the WFP's spokesman in Asia.
Next month, the WFP plans to complete an assessment of North Korea's food situation - a report that could influence how foreign governments respond. But few doubt that North Korea's 24 million people need food.
For two decades, since the collapse of a public distribution system that supplied food rations, Kim Jong Il's government has neglected to care for its people. In the early and mid-1990s, an estimated 1 million died in a famine.
North Korea has since developed a grass-roots network of private markets - a stand-in for government programs but also the target of occasional crackdowns from a leadership that views free-market activity as a threat.
Amid the food shortages, though, humanitarian experts describe another failure: the international aid effort. Outsiders have yet to devise a formula that reaches basic standards for monitoring or effectiveness. After 15 years and about $2 billion of aid efforts, one in four pregnant women is malnourished and one in three children is stunted.
The government places obstacles at every step of the distribution process - the top complaint from U.S. officials, who demand better transparency before aid resumes.
Sen. Richard G. Lugar (Ind.), the ranking Republican on the Senate Foreign Relations Committee, released a statement this week calling it "essential" that U.S. assistance is "actually received by hungry North Korean children and their families, rather than reinforcing the North Korean military whose care is already a priority over the rest of the population.
Researchers and nongovernmental organizations disagree on the proportion of food aid the North Korean government diverts, with estimates ranging from 10 to 50 percent. Diverted food aid, according to experts, is given to the military, redistributed as gifts for elites or resold - at a steep profit - to vendors in markets. John Everard, the British ambassador in Pyongyang from 2006 to 2008, said he saw rice bags labeled "World Food Program" in market halls.
In recent years, North Korea has often banned food aid monitors from traveling to the most vulnerable provinces. It also demands that monitors do not know Korean. Though North Korea makes exceptions, Prior said, it generally demands seven days' notice before monitors can visit an area.
Kim Seong-min, a former North Korean army propaganda officer who defected, said he once saw a ton of rice aid arrive at a distribution center. The military distributed the food in a village at a monitor's request but later went door to door retrieving it.
"I remember some of the collection officers were complaining about not being able to collect 100 percent of the rice," Kim said.
Partly influenced by earlier distribution challenges, the WFP last July tailored its operation in North Korea exclusively to women and children, targeting hospitals, orphanages and schools. The program gave out blends of milk and rice or milk and cereal - concoctions unlikely to be presented as gifts to the most loyal cadres.
Hunger problems, however, threaten to grow wider this year, experts say. North Korea has endured its coldest winter in six decades, and farmers worry about below-average crop output. North Korea last week confirmed an outbreak of foot-and-mouth disease, with its state-run news agency saying that "more than 10,000 heads of draught oxen, milch cows and pigs have so far been infected with the diseases and thousands of them died."
As of two years ago, the U.S. government ranked as the largest food donor to North Korea, giving 170,000 tons between May 2008 and March 2009. When that program was terminated, 22,700 tons of U.S.-donated food remained in the pipeline. North Korea hasn't accounted for how that food was distributed.
North Korea lost another major donor in 2008, when conservative President Lee Myung-bak came to power in South Korea. Lee promptly revoked the massive shipments of food - sometimes half a million tons annually - delivered by his liberal predecessors under the Sunshine Policy.
In recent months, numerous defector groups in South Korea have reported food shortages not just among civilians in the North but also within the 1.2 million-member military.
Good Friends, a Seoul-based aid group that has informants in the North, reported in January that the ruling Workers' Party had ordered a nationwide food donation for soldiers.
"The regime doesn't mind that much if the civilian population goes hungry," Everard said. "But if its core supporters and the military don't get fed, then it starts to get nervous."
Special correspondent Yoonjung Seo contributed to this report.
AMSTERDAM - De Nederlander zal in de loop van dit jaar 3 tot 5 procent meer moeten betalen voor voeding. Op de wereldmarkt zijn de prijzen van graan en mais in korte tijd verdubbeld, en de prijs van koffiebonen nam met 60 procent toe.
Dit zal de komenden maanden doorwerken in de prijzen in de Nederlandse winkels. Dat meldde woensdag het Economische Bureau van ING.
De prijzen van voedsel op de wereldmarkt zijn vrijwel even hoog als in 2008. In Nederland had dat tot gevolg dat in maart 2009 de prijzen van voeding in de winkels zo'n 5 procent hoger waren dan een jaar eerder.
De Nederlandse consumenten hebben tot dusver niet veel van de stijgende prijzen op de wereldmarkt gemerkt. De prijzen van voeding zijn de laatste twaalf maanden 0,8 procent hoger geworden in de winkels.
De Nederlanders geven gemiddeld 10 procent van hun netto-inkomen uit aan voedsel, waardoor de prijsstijging niet erg gevoeld wordt.
Niet alleen brood en andere producten waarin graan wordt verwerkt, worden in Nederland duurder door hogere prijzen op de wereldmarkt. De stijging van de graanprijzen werkt ook door in de prijs van veevoer, waardoor vlees duurder kan worden.
De inflatie wordt dit jaar geraamd op 2 procent. Dat komt niet alleen door hogere voedselprijzen, maar ook door hogere olieprijzen op de wereldmarkt. De benzine is in Nederland nu zo'n 10 procent duurder dan een jaar eerder.
Later dit jaar merken de consumenten de prijsstijgingen niet alleen aan de pomp, maar ook aan de kassa, voorspelt het Economische Bureau van de ING.
As violent conflict spreads around parts of the world, the global grain market is continuing to tighten.
The situation is exacerbated by dry conditions in the Americas and bad weather in Russia.
The futures and domestic markets have been steadily rising over the past month, closing in on the record prices of 2008.
Mark Martin, a grain marketing advisor from Market Ag, says there's a direct correlation between the current instability in countries such as Egypt, Tunisia, Libya and Bahrain and food shortages in the area.
"It's interesting to note that each of the countries, North Africa through to the Middle East, have been by far some of the biggest buyers of wheat and grains over the last two or three months," he said.
"Their governments have recognised that this is, and is going to be, a problem and so they've been trying to sure up their depleted stocks.
"It doesn't help though when the food is on-sold because prices have risen so much, but that's been passed on and it's certainly is the thing that's sparked these riots.
Mr Martin says that drought conditions in China will continue to put the pressure on global food supplies.
"Forty per cent of China's wheat crop is now seriously impacted by drought, and that's certainly worrying everyone.
"And last week we saw markets spooked quite a bit from reports coming from China that they are going to be hitting the import market big time to make up their shortfall."
TOKYO (MNI) - Japanese retailers, airlines and even and the government are rushing to pass along higher costs of food and energy as bad weather and the unrest in the Middle East are adding fuel to rising commodity markets.
Economists said while the surge in commodity prices may send Japan's consumer inflation into positive territory sooner than expected, a clear end to years of deflation is hard to achieve as the gap between supply and demand -- the root cause of stubborn price drops -- is narrowing only gradually.
This means the Bank of Japan is unlikely to have reason to consider in the near future unwinding its super-stimulative monetary policy, which is backed by the practically zero interest rate, massive injections of cash into interbank markets and low-interest loans to banks that are lending to growth areas. The Ministry of Agriculture, Forestry and Fisheries announced on Wednesday that it will raise prices of grain for domestic flour millers by an average of 18% to Y56,710 per ton, effective on April 1, marking the biggest increase since 2008.
In Japan, the government, which alone has authority to import wheat and sell it to flour millers, sets prices twice annually, in April and October, based on its preceding half-year purchase prices.
When bad weather hit international grain prices in 2007 and 2008, Japan's average domestic wheat price soared as high as Y76,030 a ton in October 2008, pushing up costs for bakeries and restaurants.
"Japan's consumer prices will move up to the surface (out of negative territory) before too long, possibly as early as in April," predicted Taro Saito, senior economist at NLI Research, a unit of Japan's largest life insurer Nippon Life Insurance Co. "Given the acceleration in the pace of rises in commodity prices of late, the core CPI may be able to log a rise of around 0.4-0.5% (year on year) in that month," he said. Japan's core consumer price index is seen falling 0.3% on year in January vs. -0.4% in December, according to the median forecast by analysts in a Market News International survey. That would be the smallest drop since April 2009, when core CPI dipped 0.1%.
The Ministry of Internal Affairs and Communication will release the CPI data at 0830 JST on Friday (2330 GMT Thursday). The private sector is also scurrying to pass on rising production and transportation costs to retail prices. Coffee beans producers ranging from Ajinomoto General Foods and Key Coffee have decided to hike delivery prices of their coffee beans while Starbucks Japan have also raised prices of some of its coffees.
All Nippon Airways Co has applied with the Ministry of Land, Infrastructure, Transport and Tourism, seeking approval to raise the fuel surcharge on its international flight services, effective April 1, following in the footsteps of its rival Japan Air Lines Co.
"If commodity prices keep rising at the current pace, Japan Inc. won't hesitate to hike prices in force, just like they did back in 2007 and 2008," NLI's Saito said.
The price tag of more than 60% of products sold at the nation's supermarket stores rose between October and January, according to a recent survey by the Nikkei business daily.
Globally food and energy costs are rising in light of drought in Russia and Northern China, flooding in Australia as well as two major earthquakes in New Zealand since September. Growing civil unrest has swept the Middle East, raising political uncertainties and crude oil prices.
Tunisia ousted its president last month and Egyptian President Hosni Mubarak resigned on Feb. 11 due to escalated anti-government protests. Pro-democracy uprisings have spread to Yemen, Libya and Bahrain, sending crude oil prices to $100 a barrel for the first time in more than two years.
Bank of Japan Deputy Governor Hirohide Yamaguchi on Wednesday warned of risks stemming from the unrest in the Middle East.
"If higher prices come from strong demand among emerging economies, it will help increase Japanese exports, which is positive," Yamaguchi told a news conference in Aomori, northern Japan.
"But if they come from a political situation or a supply shock, it won't be positive," he added.
Yamaguchi said he is optimistic about near-term economic growth prospects for Japan but added that global uncertainties -- the risk of overheating growth rates in emerging economies, balance sheet adjustments in the U.S. and Europe, sovereign risks in Europe as well as rising costs of food, energy and metals -- warrant a cautious outlook in the longer term.
After ending in March 2006 its five-year-long policy of flooding the money market with cash after the recovery of the banking system, Bank of Japan policymakers sought to restore the normal functioning of interbank dealings by raising the target for the overnight interest rate toward 1% from zero. The BOJ did hike its key overnight rate twice, in July 2006 and February 2007, as Japanese exports -- the main driver behind a sustained economic growth -- were boosted by a 5% global growth rate.
But after international financial markets began to show worrying signs caused by the unwinding of the credit bubble in the U.S. and Europe, leading the BOJ to stand pat from the summer of 2007.
In August 2007, BNP Paribas was forced to freeze its payments from some of its hedge funds in the first sign of the subsequent burst of the credit bubble which resulted in the failure of Lehman Brothers in September 2008. Around the same time, energy and commodity prices in international markets continued to rise due to strong demand from emerging economies, leading Japan's core CPI to post a record 2.4% year-on-year rise in both July and August 2008.
But soon the party was over. The global credit crisis and recession prompted many central banks to cut interest rates and inject ample funds into financial markets.
Japan's core CPI reversed course, marking a record 2.4% drop in August 2009, helped by a strong base effect resulting from the surge in gasoline and heating oil costs a year before. But the core problem -- overcapacity against slack demand, slow corporate response to changing lifestyles and consumer tastes -- have yet to be fully addressed.
Higher consumer inflation in coming months may only push up costs and may not support wage increases or consumption, so economists say the latest price rises won't change their outlook for Japan's near-term growth prospects or the conduct of monetary policy in the coming months.
"While rising prices of commodities have so far had only a negligible impact on the nation's economy, there would be a more outright impact of crude oil prices climb above $100 a barrel again," said Kazuto Uchida, chief economist at Bank of Tokyo Mitsubishi UFJ.
"But if we look solely at domestic factors, the BOJ may need to wait until around late 2013 before it can resume the normalization process of its monetary policy," he said.
Japan's negative output gap -- excess capacity vs. slack demand -- widened to 3.8% in the October-December quarter from a revised 3.5% (preliminary 3.1%) in Q3, reflecting a temporary slump in economic growth in Q4, the Cabinet Office said last week.
But the gap is expected to narrow again in the first quarter as the economy is forecast to rebound by around 1.1% at an annualized pace, above its potential growth rate, backed by overseas demand.
The economy shrank an annualized 1.1% in real terms in Q4, marking the first contraction in five quarters, as it was hit by what appears to be a temporary dip in consumer spending and slumping exports.
The output gap, which influences prices with a lag of about 12 months, has been generally improving after hitting a revised -9.2% in Q1 of 2009. Core CPI (excluding fresh food) has also been improving after marking a record drop of -2.3% y/y in Q3 of 2009. Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance Co. warned of a growing risk that Japan will further lose its wealth to resource-exporting countries as rising import prices hurt its terms of trade.
"The current price increases won't lure the BOJ to hike interest rates any time soon," Kodama said.
"What we have to worry about is a recurrence of the huge loss of income seen in 2007 and 2008 if food and energy costs were to continue to rise at the current pace," he said. Gross domestic income, which includes trading gains or losses stemming from changes in the terms of trade, fell 0.2% in the fourth quarter of 2010 from the previous three months following a 0.8% gain in the July-September quarter, according to the recent data released by the Cabinet Office.
The GDP deflator, which measures the degree of deflation, fell by an unadjusted 1.6% in the fourth quarter from a year earlier, while the import deflator rose 1.7%. email@example.com ** Market News International Tokyo Newsroom: 81-3-5403-4835 **
DROUGHT across five provinces responsible for more than half China's 100 million tonne wheat crop could trigger a major foray into global markets - including Australia - by a nation which prides itself on being largely self sufficient in wheat.
Shandong Province, which traditionally grows 20 per cent of China's wheat, is facing its worst drought in 200 years. In other areas the big dry is the worst in 60 years.
Chinese Government agency, Cofco, is understood to have already bought about 200,000 tonnes of feed wheat from Australia this year, while other grain purchases around the world have also begun.
Although a regular and significant importer of soybeans and some corn, China has been relatively self-sufficient in wheat for two decades, but now has about 6.75 million hectares of key wheat country in drought according to its Office of State Flood Control and Drought Relief.
The Chinese government is spending about $1 billion to boost emergency water supply and irrigation resources in drought areas.
China is believed to still have more than 50m tonnes of wheat in storage, but concern is spreading among food security analysts that any major push to ramp up imports could send global wheat prices well above current 30-month highs.
Wheat is mostly used to feed China's rapidly expanding pig and poultry sector meat, with domestic supplies supplemented by US corn imports, but with US prices now around $7 a bushel, solid bidding for Australia's big feed wheat crop could emerge from China if seasonal conditions don't improve soon.
Australian Farm institute, executive director, Mick Keogh, said China's hunger for grain could not be underestimated.
"Each year they harvest a wheat crop five times the size of what we would consider a a big Australian crop," Mr Keogh said.
"You would think that China has the financial muscle to be a fairly aggressive buyer if it needs to start buying.
"There's a lot of speculation that it will be a big importer this year to help preserve its social stability."
The People's Bank of China this month lifted interest rates for the third time since October in an attempt to dampen inflationary pressures that have in part been fuelled by ongoing food price rises.
Chinese food prices broke new records last month with the United Nations Food and Agriculture Organisation reporting wheat flour had risen eight per cent in January above October levels, and was up 16pc on early 2010.