Tuesday, February 12, 2008

Food & Fuel Inflation

For the last 50 years, the price of food has come down due to intensive modern farming techniques.
Why then has the price of bread increased quite significantly over the last year?

Production of wheat worldwide hasn't increased much recently, what has increased is demand from India & China with a combined population of 2 billion. This has caused much of the food inflation we have seen recently.

It's a similar story with oil & gas, there is greater demand from newly industrialising countries with production remaining level as market makers put up prices as compettion is greater.

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