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The price of rice has touched a new high, setting off fresh alarm around the world where export cuts by rice-producing nations have already led to food riots in countries that depend on imports to keep their populations fed.
While rice's surge - to US$24.55 ($30.94) per 45kg
for delivery in July - is unlikely to lead to marching in the streets in the West, it is the latest in a series of commodities, from foodstuffs to oil and building materials, to post record prices in a boom threatening to inflict serious pain on the economy.
Oil was yesterday trading close to the all-time high of US$119.90 per barrel that it reached this week, while copper remained a whisker under the new record it reached this month.
By their very nature, commodities, dependent on everything from weather and the quality of harvests to investments made years or decades ago based on a best guess of what demand would be today, are volatile.
What is different about this boom is that as the US slides toward recession, prices have continued to rise. In six decades or so of US economic hegemony, this has never happened.
Kevin Norrish, a commodities analyst at Barclays Capital, said this was due primarily to a "structural shift in demand". The health of the US used to have a direct, causal relationship to the prices of nearly all commodities. This is no longer the case. The demands from China and India have supplanted America's role as global price arbiter.
For the UK, struggling to stave off a major slowdown, this bodes ill. Inflation is running at 2.5 per cent at the moment, above the Government's 2 per cent target. That leaves the Bank of England in a difficult position; it could cut interest rates to boost the economy, but doing so risks cranking up inflation further.
"The inflation issue is going to be very troubling for central banks across the UK and Europe. It is a major issue," said Stuart Green, an economist at HSBC. It is even worse in Europe, where the European Central Bank has set an inflation target of less than 2 per cent - it is currently at 3.5 per cent.
Coming out of an unprecedented era of corporate profitability, companies have been able to absorb some of their rising costs without passing them on through higher prices. Economists warn that their ability to do may have run its course.
In some areas, the transition has already begun. Associated British Foods warned this week that bread prices, already up by 15 per cent, were set for further rises. Household energy bills have leapt by a similar amount.
What is happening, said Green, is essentially a "forced redistribution" of spending. He said: "You can't not eat, and you can't not have energy for your house."
The upshot will be starvation of other sectors of the economy, making a sharp slowdown virtually inevitable. How sharp depends, in can be said quite literally, on the price of rice in China.
- INDEPENDENT