:00:03. > :00:13.teams objected when the race were scheduled to October. -- Formula
:00:13. > :00:17.
:00:17. > :00:21.One teams. Welcome to the programme. A look at
:00:21. > :00:26.all the latest in the world of business and money. The Catalans:
:00:26. > :00:30.Food prices set to climb even higher as droughts -- drought in
:00:30. > :00:35.Europe and floods in the US raised the threat of poor harvest.
:00:35. > :00:41.In Asia, tackling inflation. The South Korean central bank surprises
:00:41. > :00:51.the market with a rate hike. Latest evidence that the global economy is
:00:51. > :00:52.
:00:52. > :00:57.losing momentum. For consumers in the developed
:00:57. > :01:01.world, already squeezed between rising living costs and stagnate
:01:01. > :01:06.salaries, higher food prices are the last thing that is needed. For
:01:06. > :01:09.millions in poorer countries, the higher cost of food is much more
:01:09. > :01:14.serious because the picture in developing global agriculture is
:01:15. > :01:20.particularly worrying. Corm prices hit an all-time record in Chicago.
:01:20. > :01:24.That is after a spring's Keady rain forced to the US Department of
:01:24. > :01:31.Agriculture to slash its top forecast. In Europe, it is an
:01:31. > :01:35.opposite problem. It is drought. America has taken a battering in
:01:35. > :01:40.recent weeks, first came the brains and flutter along the Mississippi,
:01:40. > :01:43.and then the tornadoes in the Midwest. That has hit commodity
:01:43. > :01:50.production, corn futures are trading at all-time highs, the
:01:50. > :01:54.price of many other staples are also soaring. On the back of the
:01:55. > :01:59.world recession recovery, it remain tight, and as long as the weather
:01:59. > :02:03.continues to play havoc with America, there will be upward price
:02:04. > :02:09.pressure. Global food prices are rising, caused by higher demand and
:02:09. > :02:13.not enough supply. The World Bank says its food price index is 36%
:02:13. > :02:17.higher than last year. There have been large rises in the price of
:02:18. > :02:22.basics such as maize and wheat. He pushed an extra 44 million people
:02:22. > :02:27.into poverty. The outlook is not promising. Drought in France and
:02:27. > :02:31.elsewhere in Europe mean lower harvests. President Sarkozy has
:02:31. > :02:35.offered a aid package to farmers with hundreds of millions of euros.
:02:36. > :02:40.The only good news comes from Russia. The government is expected
:02:40. > :02:46.to lift its ban on grain exports next month. But in Moscow, they may
:02:46. > :02:56.impose limits to control inflation at home. For food prices, the only
:02:56. > :02:57.
:02:57. > :03:04.way is up. As we saw, this is not a double
:03:04. > :03:10.whammy. This is a lot of whammies, tornadoes, droughts, floods,
:03:10. > :03:15.cyclones. On top of that, we are seeing a surge in demand from China
:03:15. > :03:19.for the foodstuffs that the typically West eat. It is very
:03:19. > :03:23.serious because it is coming on top of two years were basically
:03:23. > :03:28.supplies have not been able to catch up with demand. As a result,
:03:28. > :03:35.stocks as a proportion of global consumption are quite low in a
:03:35. > :03:40.historical context. We be without becoming more extreme, -- with the
:03:40. > :03:45.weather becoming more extreme, it has created habit. You mention the
:03:45. > :03:50.drought in China, the drought in parts of the southern US, in Europe,
:03:50. > :03:56.these are causing major problems. What we are really concerned about
:03:56. > :04:00.his corn and global maze. It is critically tight. Wheat is also
:04:00. > :04:07.looking quite risky. We are worried about some harvests in the European
:04:07. > :04:11.Union and maybe Canada. There is no relief in the mind of consumers
:04:11. > :04:19.that we are going to see a big decline in prices, when you have so
:04:19. > :04:24.much supply-side concerns, it is reflected in prices. There is not a
:04:24. > :04:28.lot of slack in this supply chain. All of this has a knock on effect.
:04:28. > :04:35.You mention the wheat and corn prices that have shot up overnight,
:04:35. > :04:43.but it is not only the products, but it goes across the whole chain.
:04:43. > :04:50.There is food for meat and dairy. Absolutely. Crane is one of the
:04:50. > :05:00.biggest concerns for the feed costs for the livestock industry. Food
:05:00. > :05:01.
:05:01. > :05:06.inflation has been rising. It is a concern in developing countries.
:05:06. > :05:16.But even in Europe, we are also feeding higher food inflation. The
:05:16. > :05:23.
:05:23. > :05:26.UK is a net importer of foods so we do suffer here.
:05:26. > :05:35.Inflation has prompted a surprise rise in interest rates in South
:05:35. > :05:40.Korea. Yesterday we were talking about higher oil prices, today it
:05:40. > :05:46.is higher food prices, all of which feed into a global picture of high
:05:46. > :05:51.inflation. It has a lot of governments very worried. Inflation
:05:51. > :05:55.is a huge concern in a shout. It is not a South Korea, but all the
:05:55. > :05:58.Asian central banks have been having this dilemma, because
:05:58. > :06:02.inflation has the economies, they want to tackle it by raising
:06:02. > :06:07.interest rates, but he also had slow economic growth in the US and
:06:07. > :06:13.Europe, which as still Asia's main trading partners. China in India
:06:13. > :06:16.are trying to pool their economies because they do not want to -- I
:06:16. > :06:23.tried to cool the economy is because they do not want them to
:06:23. > :06:27.overheat. Analysts were a bit surprised with today's interest
:06:27. > :06:33.rate hike. Last week, we saw the Thailand's central bank raising
:06:33. > :06:36.interest rates. We saw Australia, New Zealand and Indonesian central
:06:36. > :06:42.banks keeping their rates on hold because they are keen to keep are
:06:42. > :06:48.boosting their economy. More evidence in the last hour that
:06:48. > :06:57.the global economy is losing its momentum. China's export growth has
:06:57. > :07:05.slowed in made to an annual rate of 90%, it was almost 30% in April. We
:07:05. > :07:10.are going straight to Beijing. Two parts to these numbers. One is
:07:10. > :07:14.telling us what the global economy is doing, and one is telling us
:07:14. > :07:22.about the domestic economy. These are still numbers that many would
:07:22. > :07:25.give their right arm for, but are they suggesting a global slowdown?
:07:25. > :07:35.We have to be careful reading too much into the monthly figures,
:07:35. > :07:38.because they can be very volatile. China is seeing a slowdown in its
:07:38. > :07:43.exports because demand in Europe and America, absolutely key markets
:07:43. > :07:47.for China, the demand is slowing down, and the main reason for that
:07:47. > :07:54.is there is concern in that part of the world over the health of their
:07:54. > :08:00.economies. Beijing has been working hard over the last few years to
:08:00. > :08:06.rebalance the economy. Less reliant on exports, more of a boost for
:08:06. > :08:11.consumer, domestic consumers. Does it suggest that what Beijing is
:08:11. > :08:15.doing is working? It is difficult to tell on monthly figures, but
:08:15. > :08:19.there are higher import figures which would suggest that China is
:08:19. > :08:26.consuming more. That will be some been welcomed by other countries
:08:26. > :08:31.around the world. They want to see China consume more in order to draw
:08:31. > :08:35.growth from around the world. It is worth pointing out that in terms of
:08:35. > :08:40.exports, the cost of doing business in China is increasing. We have
:08:40. > :08:50.seen inflationary pressures on salaries, deep appreciation of
:08:50. > :08:57.
:08:57. > :09:02.China's currency, and that is making exports more expensive.
:09:02. > :09:08.We are taking a look at the markets in Asia. They are kind of light
:09:08. > :09:18.yesterday, a mixed bag. Facia has climbed, they snapped a six-day
:09:18. > :09:24.
:09:24. > :09:28.Investors were closely awaiting a watching for these Chinese numbers
:09:28. > :09:33.that they have now seen. Not a great reaction. Monthly numbers