FOOD INFLATION RAMPANT
Last week Britain's Office for National Statistics (ONS) said food prices were up 6.6 percent over the year to April, the highest annual rate since records began in 1997.
Sharp food price increases and food shortages in the developing world have triggered protests and riots, prompting protectionist hoarding of food supplies and thrusting the question of food-security into the public arena.
The White House and the United Nations' Food and Agriculture Organisation (FAO) have said food prices will stay high for two or three years and only settle down when stocks are replenished.
But Holden said consumers in industrialised nations would need to get used to spending more of their income on food.
British consumers on average now spend about 10 percent of their disposable income on food, compared with about 30 percent in the 1970s, Holden said.
Signs have emerged that British consumer spending habits were already changing and market conditions were poised to get worse, but demand for many organic products should remain robust despite rising prices, analysts said.
"Free-range and organic meat is flying off the shelves. Consumers can't get enough of it and retailers can't source enough of it," said David Bird, senior consumer analyst at market research firm Mintel. "Animal welfare has become quite a big issue now."
Tight supplies of organic livestock and poultry feed will continue to drive up prices of organic meat and poultry and high freight costs will buoy prices of imported foods, but the price of locally-sourced organic produce should not rise as steeply.
Organic food sales have grown by about 70 percent since 2002 and should expand by another 44 percent by 2012, Bird said, adding that the heady growth of the organic sector's infancy was bound to slow.
"Organics are not mainstream but they're not as niche as they once were. As in most markets there comes a point where growth rates will slow. It's just a sign of a maturing market."
