I've blogged about food prices once or twice before: and I really don't want to go on about the matter. But I am amazed at how little attention has been paid to the extraordinary trend in food related prices in Ireland in recent months.
Take the trend in agricultural output prices (the price of agricultural produce sold by farmers). The latest CSO report on agricultural price indices shows a staggering rise in the price of certain products sold by farmers. Cereal prices charged by Irish farmers were up 67.7% year-on-year in December. Milk prices were up 49.5%. In the chart I have plotted the trend in annual inflation for both milk and cereals going back to January 1996. Right now we are experiencing something unprecedented in domestic food price trends.
Martin Wolf writing in yesterday's Financial Times puts the trend in food prices into a wider, global context. Commodities are on the rise everywhere it seems, with rising energy prices fueling rising food prices. It is only a matter of time before these trends start to show up in the headline inflation rates in Europe and elsewhere, putting the European Central Bank and others in a very awkward position vis-a-vis interest rates.
When the prices of milk and cereal starts pushing up mortgage rates then I think the matter will receive a lot more attention than it has been getting until now.