Written question asked by Huw Irranca-Davies (Labour) on Friday, 28 October 2011, in the House of Commons. It was due for an answer on Tuesday, 1 November 2011. It was answered by James Paice (Conservative) on Tuesday, 8 November 2011 on behalf of the Department for Environment, Food and Rural Affairs.

Food: Prices

Question: To ask the Secretary of State for Environment, Food and Rural Affairs what assessment she has made of the effect of fuel prices on food prices in (a) each of the last five years and (b) the next five years.

Answer: There are a number of factors that affect food prices in the shops, the largest driver being world commodity prices, but with exchange rates and oil prices also having an impact.Increases in global energy prices increase the cost of agricultural inputs, especially fertilisers, putting an upward pressure on commodity prices. Along the food supply chain, higher energy prices will impact retail food prices by increasing the cost of transporting, processing and marketing.Recent research modelling undertaken by the university of Nottingham and the university of Exeter for DEFRA¹ showed that the long term effect of a 10% shock to the world price of oil, translates into a 3.50% increase in retail food prices, other factors held constant. However, there will be interactions with other drivers of retail food prices, and the modelling shows that larger persistent shocks have a greater effect than smaller one-off shocks.DEFRA routinely monitors trends in the affordability of food, looking at both domestic retail food price inflation (as measured by the consumer price index) and changes in the factors that drive domestic retail food price inflation."¹ Retail Food Price Inflation Modelling Project—T. Lloyd et al, April 2011"

Secondary information