Chart of the Day: EU Wheat, Bread and Cereal Prices

Our chart today links what has been happening to international wheat prices with the cost of basic groceries such as bread and cereals in the shops in the UK. Globally, wheat prices have been surging higher over the last few years - look at the movements in European Union milling wheat prices since the start of 2006. Changes in raw commodity prices invariably feed through into the prices of products on the supermarket shelves albeit with a time lag. (Can you spot any in the chart). And certainly in recent months, the CPI for breads and cereals has moved sharply higher as food manufacturers have passed on some of their higher costs. The CPI data suggests that bread and cereal prices have risen by over 12% since the start of 2005, yet milling wheat prices have jumped by more than 250%? How can you explain this difference? And who gains from the spike in grain prices - good news for farmers perhaps? Not if you are rearing cattle and having to find the money for more expensive grain as feed.