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Alistair Darling has called a Downing Street summit with Britain's biggest supermarkets over the threat posed to the UK economy by spiralling food prices.
The Times has learnt that the Chancellor will meet representatives of the retail chains, the National Farmers' Union, the British Retail Consortium and commodity traders today.
The move is the latest in a round of high-profile meetings held by the Chancellor since his £2.7billion climbdown this month over the controversial 10p tax rate. He met the Association of British Insurers yesterday.
The meeting comes as the Centre for Economics and Business Research (CEBR) claims that increasing global demand for agricultural produce could force up food prices in the UK by 5 per cent a year over the next decade - nearly double the official rate of inflation. A CEBR report asserts that food inflation among the big four supermarkets is running at between 4.1 per cent at Asda to 6.1 per cent at Tesco.
Douglas McWilliams, the CEBR chief executive, said: “The problem is going to be a long-term one rather than a short-term one. As they say: ‘You ain't seen nothing yet'.”
A Treasury spokesman declined to comment on today's meeting, saying that it was private. Mr Darling reflected his concern at rising food prices last week when he urged European counterparts to consider a fundamental reform of agricultural subsidies and tariffs. In a letter to finance ministers, he said: “Rising global food and energy prices are increasing inflationary pressures across the world economy, hitting poorest households the hardest and threatening to reverse the progress we have made over the past few years in reducing poverty.”
Ernst & Young, the accountant, said this week that rising food and energy prices accounted for more than half the UK's 3 per cent inflation rate. Last month a survey indicated that the cost of a typical basket of 24 everyday items, such as milk, cornflakes and pasta, was 15 per cent higher than a year ago in Britain's three biggest supermarket chains.
Food producers say that further price rises may be on the way, depending on the wheat harvest this year. Analysts fear that the weak pound may lead to imported inflation on food, given that the UK imports £14billion more food a year than it exports. Tesco and Asda confirmed yesterday that they would be attending the meeting. J Sainsbury that said it was being represented by the British Retail Consortium. Invitations to the chief executives went out late last week.
Andrew Opie, the food policy director of the British Retail Consortium, said that food inflation had to be viewed in perspective, given that prices have been increasing at a slower rate than the cost of living for a decade.
He added that the Government had to make a link between the administrative burden on the food industry, including proposals to impose an industry ombudsman, and the threat of further price rises.
Vince Cable, the Liberal Democrats' Treasury spokesman, said that Mr Darling was engaging in “potentially dangerous gimmickry”, given that many of the root causes of food inflation were outside of his control.
Mr Cable said: “The problem is that by having such a high-profile meeting with supermarkets and farmers he is giving a distinct impression the Government can actually do something about it.”
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Over 10 yrs this Gov has had one agenda to close UK Ag. down with inept policies and political dogma ,rely on the rest of the world to feed us We now produce less food / head of pop since the 2nd war. The mark up on fresh produce by the supermarkets is obseen Farmers only had a fraction of increase
martin Morrison, Northallerton, N.Yorks
Dude, it's time to crack open those wine and cheese lakes we've been hearing about for decades.
Jonathan, Baldock, UK
Give up farmland to the sea, demand greener farming, ban GM products, ban pesticides and fungicides, abandon CAP, stop all agricultral subsidies, have English Nature after the landscape and commission the Ornithologists to investigate bird welfare.
Cheaper food for people? Tell that to the birds!
john, woodbridge,
So a meeting between our Chancellor and the Supermarket chiefs about the nation's food prices is - wait for it - private?!!? Sarko had a meeting with the French supermarket chiefs and told them to keep their overall inflation down to a fixed percentage. And they did. Don't hold your breath here...
john problem, winchester, uk
I suppose thats what we get for allowing these Supermarkets to roll in and destroy the local producers and suppliers.
They've got us over a barrel now.
Phill , The Wirral, England
this is rich... the supermarkets are only passing on the rises that have been caused by the ridiculously high price of petrol & diesel in this country... If he slashed the duty on petrol & diesel by 20 pence a liter then prices should fall back...
paulc, gloucester,
What on earth does Darling think he can achieve by this, other than spin and propaganda? It is just grandstanding! Rising food prices are totally out of the control of either the Government or the food industry. It is excessive Government spending and borrowing which should be concerning Mr Darling!
Richard, Kidderminster, England
The king is wearing no clothes!
D Halley, liverpool,
Production costs are up, due to GB wanting green diesel. Fuel (delivery) prices are up, helped by the massive amount of tax (GB again). Heating/lighting costs are up (world economics). It's not difficult to see why food prices are going up, unless you're the chancellor apparently.
David Leslie, Perth, Scotland
The fact is food prices are rising all over the world Britain has not been singled out, ask any other European country. With the growing economies of China and India etc trying to get a decent dinner we in the west have to learn to share for once!
Mark, Malmö, Sweden
People will have to get used to eating the cheaper cuts of offal and oats will make a comeback as a wonder cereal! Scotish agriculture should boom. Porridge for breakfast with salt and hardy walk round St. James´s Park, Prime Minister.
Charles Morgan , Madrid, Spain.
It is an unsustainable attitude to work that is sinking the economy. Creating costly jobs through building management structures (notably public sector, education & NHS) rather than essential infrastructure is fuelling inflation.Manufacturing & farming are turned into property & land speculation.
andy, london,
We need a prices and incomes policy imposed by the Govt. In fact we already have an incomes policy imposed on Public Sector workers, just extend it to everyone else.
dave kinsley, derby, uk
We are at a crossroads - economicaly and politically. We urgently need to slash public spending and give taxes back to our people. We could start by handing back the extra tax revenue raised on transport and home energy. Inaction will lead to a series of social and financial crises!
Steve Marchant, Broadhempston, UK
Perhaps if this Goverment and Local Authorities stopped the constant tax rises it keeps burdening business with we might be able to reduce or at least stablise some of these price increases. After a two week holiday in Portugal I was shocked at the level food price increases in just two weeks.
Dave, Mold, Flintshire
Is Mr. Darling is going to meet with the Supermarket Guru's to take advice on how to run a successful business?
Mike O Connor, plymouth,
Why has the BOE been cutting interest rates since last December which has resulted in a 15% fall in the value of the pound?Surely their job is to control inflation,not attempt to rescue a falling housing market.
stephen hulton, eure, france
Oh Darling! He is as about as much use as a chocolate fire guard. This Government has wasted the mass of tax collected during the good times and has saved nothing for the bad times. So much for Gordon Brown's prudence!
Petrol is going up a 1p a week, yet he still wants to waste billions on ID cards
Pete Smith, Crewe,