Thursday, November 8, 2007

The cost of a night out rises

Now that beer prices are rising, it is about time for central banks to exclude alcohol prices from their measures of core inflation. Fuel and food prices are already excluded.

Fewer beer and pizza nights as prices soar

Cost inflation is a growing headache for companies around the world as a mismatch between the supply of and demand for food, metals, oil and other commodities continues to widen.

This week Credit Suisse predicted that agricultural crop prices would continue to
soar. It said global food production needed to rise at 3.3pc a year to keep pace with the dietary needs of a growing population and expanding biofuels industry, but due to expansion and slowing productivity improvements it is likely to rise little more than 2pc.

"Agricultural markets are straining to keep up with demand, and prices have been spiralling upwards. Is this a temporary issue? We think not," Credit Suisse analyst Andrew Garthwaite concluded.