Tuesday, June 10, 2008

83% rise in oil costs over the last year cascading down the production chain.

UK Telegraph
Cost of living to keep rising as oil and food hit record highs
By Harry Wallop and Edmund Conway
Last Updated: 11:40PM BST 09/06/2008

Families should brace themselves for drop in the standard of living not seen since the oil shocks of the 1970s, economists warned after official figures showed the price of oil and food had hit a record high.

The price of food, clothes, petrol and other goods are set to climb far faster than most salaries – leading to a severe downturn in families' standard of living.

The warning came after the Office of National Statistics released "absolutely horrendous" factory inflation figures, which showed that prices last month increased at the fastest rate since records began 22 years ago, and most probably since 1976.

Economists warned that the increase in prices would reduce families' disposable incomes at the fastest rate since the oil crises of the 1970s and early 1980s...

The price of food ingredients, oil, energy, chemicals and metals have all soared over the last month, with factories having to pay 27.9 per cent more for their goods than a year ago, according to the Office for National Statistics...

...Experts warn that retailers will have no choice but to pass on the record costs that factories are facing, especially as the cost of crude oil has increased by 83 per cent over the last 12 months.

...Jonathan Loynes, at Capital Economics, said: "The increases are now so large that at least some portion of them looks likely to work its way into the high street, even if retail sales slump."

The Producer Price Indices (PPI) – both what the factories are paying for their goods, and what they are passing on to their customers – are now at their highest level since records began in being collected in this way in 1986.

However, the Office of National Statistics added that they are almost certainly the highest level since November 1976.

I can hardly add to that - we're not in any better shape on this side of the pond.

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