Stazjia’s Commentary

At last some moderately good news

Posted on: October 17, 2008

This year, up to September, food prices in the UK rose by 9%. Much of the rise was a combination of increased oil prices, poor harvests and a trend for crops to be produced for bio-fuels. Now prices are beginning to either fall or rise more slowly.

Generally harvests around the world have improved this year, although some crops in the UK have suffered from the wet summer. Even so, fruit and vegetables prices have fallen by an average of 5.9%. A factor in price reductions has been increasing numbers of consumers buying from discount supermarkets with Aldi seeing an increase in customers numbers of 21%. Stores like Tesco and Sainsburys have had to bring down prices to hold on to customers.

Another trend in the UK has been a switch by shoppers from higher priced foods, for example, buying minced (ground) beef instead of steak. Even Waitrose, one of the UK’s higher priced supermarkets, have started selling cheaper cuts of meat like ox cheek and pigs’ trotters.

Petrol (Gas) Prices
Today Brent Crude Oil is selling for $68 a barrel, a big drop from its record high of $147 a barrel in July this year. Finally, we are beginning to see a fall in prices for motorists at the pumps.

Yesterday Gordon Brown told petrol retailers they should be dropping their prices to below £1 (British pound) per litre. He said there was too much variation throughout the country with some petrol stations charging £1.20 per litre while two supermarkets, Asda and Morrisons, are charging 99p (pence) .  The Automobile Association (AA) in the UK has released a statement today saying that prices of petrol in Britain have fallen faster than the summer increase. With average prices in mid September of just over £1.24 per litre as opposed to an average of just over £1.17 today, The AA said, “The 6.48 pence petrol price change compares with the record 5.6 pence increase in June.”

Now we just have to hope that companies pass on these savings in their own costs to consumers. If they don’t, their sales will almost certainly suffer with increasing worries about job security and rises in the cost  of mortgages.

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