Serious inflation in real good is happening before our eyes. All this inflation, yet the prime interest rate in the US is in low single digits. This may mean that the real interest rate is actually negative.
Price of rice set to soar
Shortages in exporting countries push up the wholesale cost, force local supermarkets to raise theirs
Joanne Lee-Young, Vancouver Sun; with files from Reuters
Published: Thursday, April 03, 2008
Food-price inflation is about to hit one of the main staples for local shoppers at Asian supermarkets: rice.
At T&T Supermarket, executives have been watching wholesale prices rise more than 100 per cent during the past year.
"Prices have basically more than doubled," said Herman Poon, T&T's marketing manager. "If we take a specific example, like rice from Thailand [the world's biggest exporter], there is still a lot of upward movement. It has gone up 30 per cent in the last month."
At Jia Jia, an Asian market in Richmond, owner Raymond Lin said that starting next week, he will raise retail prices by 20 per cent.
With rumours swirling day to day as to when exactly this might happen, some customers are already picking up some extra 10- and 20-pound bags of rice, said Lin.
"Instead of one bag, they are picking up two or three."
T&T has managed so far to shield its customers from large price hikes, Poon said, because with eight stores across Metro Vancouver it has a "bigger buffer" than other retailers in the form of larger inventory stocks.
"But this is going to change real soon," Poon said. "We are just hanging in there for the next 30 days" in terms of price changes that would impact consumers.
Sean Hwang, the manager of H-Mart, a Korean supermarket with three stores in Metro Vancouver, said he is struggling with the idea that he might have to do what other retailers are already doing. As much as possible, he would like to avoid raising rice prices.
"[Rice] is a very sensitive item. For Koreans, it is a main food. We usually don't make money on it [anyway], so it is very hard for us to change the price."
Most countries that export rice face supply shortages, the Food and Agriculture Organization said Wednesday.
And those nations are curbing overseas sales to contain food prices at home, the Rome-based United Nations organization said in an e-mailed report, adding that China, India, Egypt, Vietnam and Cambodia have imposed curbs on shipments, including minimum export prices and quotas.
"The international rice market is currently facing a particularly difficult situation with demand outstripping supply and substantial price increases," said Concepcion Calpe, a senior economist at the FAO.
On Monday, India imposed a ban on non-basmati rice exports to ensure the country had enough rice to feed its more than one billion people.
And Indonesia, the world's third-largest rice producer, may also curb exports as declining inventories threaten to spark unrest around Asia.
Indonesia's rice production may exceed domestic consumption by about two million tonnes this year, insufficient to allow for exports, Agriculture Minister Anton Apriyantono said Wednesday. The United Nations warned in February that 36 countries, including China, face food emergencies this year.
Rising populations and higher incomes across Asia are leading to increased consumption of rice. Global production will rise to a record of about 423 million tonnes, and consumption is expected to increase to nearly the same amount, according to the U.S. Department of Agriculture.
Higher fuel prices and hoarding by suppliers anticipating higher prices are also being blamed for inflation in rice prices.
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