Tuesday, 4th March 2014
UK: The Great Resource Price Shock
Source: Green Alliance (UK)
Over the past decade, world prices of key resources have risen sharply and have been highly volatile. Between 2003 and 2013, world fuel prices rose fourfold, metal prices trebled and food prices roughly doubled. This sharp rise, affecting most commodity groups, is in marked contrast with much of the 1980s and 90s, when real commodity prices generally declined. In this policy insight we call this recent phenomenon the ‘great resource price shock’ and explore its impacts on inflation and living standards in the UK. We also discuss the factors likely to influence its future evolution and the policy responses available to mitigate it.
Since 2003, rising food and energy bills have pushed up the overall inflation rate by around 0.5 percentage points per annum and have made the task of controlling inflation more difficult for the Bank of England. These higher bills have also made a significant contribution to declining real living standards in the UK with poorer households particularly affected. We have calculated that, if food and fuel prices had just kept pace with other consumer prices since 2003, the average household could have saved over £1,000 on its food and household energy bills in 2012. Given that the UK is becoming more dependent on imported commodities, rising resource prices will have increasingly adverse impacts on the UK economy.
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Having begun his career in academic libraries, Adrian Janes has subsequently worked extensively in public libraries, chiefly in enquiry work as an Information Services librarian. In this role he has had particular responsibility for information from both the UK Government and the European Union. He wrote a detailed report on sources for the latter which was published by FreePint in 2007, and has contributed articles to FreePint and ResourceShelf. He is involved in training in information literacy and the use of online reference resources.
A Contributing Editor to DocuTicker, he also write reviews for Pennyblackmusic.
Adrian can be reached at firstname.lastname@example.org
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