Re: SC49

http://www.abc.net.au/pm/content/2007/s2031403.htm

Soaring wheat, oil prices spark global inflation fears

As central banks prepare to cut interest rates to relieve a global credit crunch, they're being stalked by the threat of inflation.

Wheat prices rose to record highs on global markets today. Oil prices rose to near-record levels. And as pork prices soar, China posted its highest inflation figures in more than a decade.

Economics Correspondent Stephen Long.

STEPHEN LONG: Recession's been the big fear as the fallout from defaulting US mortgages drove a global credit crunch and threatens to undermine the world's largest economy.

But the question now is which is the bigger threat: the credit crunch or soaring prices for key commodities around the world?

America's central bank looks certain to cut rates next week, possibly by as much as half a per cent. But suddenly, it's been given a reminder that inflation pressures have not gone away. Overnight, contract prices for West Texas Intermediate Crude Oil rose above $78 a barrel - close to a record high - and the price of a bushel of wheat went one better.

Malcolm Bartholomaeus is a market analyst with Callum Downs Commodity News.

MALCOLM BARTHOLOMAEUS: So this morning in overnight trade in the US, it hit 900 US cents a bushel on the December contract. To put that into context, we have never had the December contract expire at above 500 US cents a bushel.

STEPHEN LONG: The cause of the latest spike? A fear that unless spring rains fall in the Australian wheat belt within the next week or two, the crop will be meagre.

But its part of a longer run trend. Wheat prices have risen 350 per cent over the past five years, with global reserves now at their lowest level since the early 1980s.

The price of other key grains has soared, too, as cars compete with cattle and the kitchen table for access to crops..............

This article was posted yesterday. Currently oil prices have risen to a new record high of $79.29. Growing climate change disruptions and world wide oil supply declines will be precipitating increasing inflation pressures.