Food prices threaten Christmas
It’s common to complain about the necessity of buying food and groceries, but according to reports, things are going to get tougher.
Food prices have already been rising through the year, not least due to increased demand from China and India.
However, severe weather conditions over the summer have badly affected food harvests across the world. Drought continues in Australia and southern Europe, and heavy flooding has affected the UK, western Europe, the farming belts of the USA, Canada, and Russia, as well as across China and the Indian subcontinent.
The problem is, any rise in food prices is likely to fuel inflation, which Central Banks around the world are required to cap to help economic conditions remain relatively stable over the long term.
And this comes at a time when stock markets are in turmoil, and Central Banks are keen to reduce interest rates to help bail out borrowers stuck with worthless bad credit IOU’s.
So while Central Banks have already tried to help the financial markets over August, they are unlikely to be able to do so much longer. In fact, they are likely to have to raise interest rates to help keep on top of inflation.
Well, that could all sound like gooble-de-gook and general jargon to most people, but the kicker is that rising food prices means less money available for buying other things. Um, such as Christmas presents.
And rising interest rates means higher mortgage payments, which means even less money to spend at Christmas.
So you see, something as simple as bad weather is compounding an already problematic situation with economies around the world.
The good news is that hopefully this is only going to be a short-term issue. We are in a La Nina year after all.
The bad news is that we could all be in for very tight wallets over the seasonal shopping period.