Food Hikes Join Oil's March

According to the Financial Times, the UN's Food and Agriculture Organization is warning of a significant boost in food prices - a 21 percent increase in the world's food import bill as compared to 2006. Developing countries will be hit even harder at 25.5 percent, and may follow Russia's direction of retail price controls. Of course, that's only going to aggravate things, as merchants will get to the point of no longer being able to operate, the food sector generally being one of the lower margin businesses in the world.

The culprits? One is oil. Pricing approaching $100 a barrel are encouraging greater use of corn for biofuels, which means less room to plant crops for eating. Add various droughts that are lowering wheat production, and the short term is looking shaky. It does make me wonder how bad things would be if the value of the dollar wasn't slipping, as the pound exchange rate just hit $2.10.