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Food Prices: Costs go up, supplies dwindle as demand increases and people hoard riceGas Prices: Prepare to pay $2.25 a litre, with crude oil at $225 U.S. a barrel by 2012- - -Soaring prices on everything from food to gasoline walloped consumers yesterday as the Bank of Canada warned of weaker economic growth to come -- new evidence the U.S. recession has deepened and is dragging down other sectors of the economy as it continues to slide.Basic food items are becoming more scarce and the price of those commodities is soaring, matched only by the rapid increase in the cost of gasoline. Food shortages, hoarding by producing countries and a pernicious cycle of energy prices driving up production costs is only making the situation worse.Prepare for gasoline prices to hit $2.25 a litre by 2012 and for crude oil to soar to $225 U.S. a barrel as scant supply growth delivers us into the "age of scarcity," says CIBC World Markets chief economist Jeff Rubin.He also forecast that Canadians will start to feel the impact of the global increase in food prices next year, with food inflation jumping to 3.5 per cent in 2010 from just 0.4 per cent today.Maple Leaf Foods Inc., one of Canada's largest food processors, reported a loss yesterday due to soaring costs for grain used in its bakeries and hog barns."These are stunningly, stunningly challenging and unique times," chief executive Michael McCain told shareholders at the company's annual meeting."The world is embroiled with absorbing the implications of the simple truth that food will be considerably more expensive, well into the future," he said.Food riots have spread from Haiti to Thailand and panic buying has even hit North America -- Wal-Mart has imposed rice rationing in the United States because of shrinking supplies and Bruce Cran, president of the Consumers Association of Canada, said he was told that store shelves were being emptied of rice in British Columbia."It's a human trait to hoard, but there is only so much food to hoard," he said. "The world crisis is obviously going to have a ripple effect into Canada."Eating habits will be forced to change, says Mr. Cran, and its likely in the near future, consumers will no longer have the option of fresh pineapples and oranges in the winter."My advice is to go speak to your granny and get a canning recipe before she leaves this world."Rice prices jumped five per cent in Thailand as prices surged to $1,000 a tonne yesterday. The country has been hit by an increased demand from developing countries at the same time that poor crop yields have left rice stocks at their lowest in 20 years. India, Vietnam and Thailand have restricted rice exports.Canada has largely been sheltered from rising food prices, even relative to the U.S., said Avery Shenfeld, senior economist at CIBC World Markets, yesterday in a report titled Food Inflation: Coming to a Grocery Store Near You. "But after looking at what's behind that exceptional gap, it's clear that Canada's good luck on food prices is likely to run out in 2009."Where prices have risen, for example, on bakery products, pasta and flour, they've been offset by lower prices on other products, said Mr. Shenfeld, adding the stronger Canadian dollar has made imported food items more affordable.Mr. Shenfeld warns, however, "the loonie will not come close to matching the 17 per cent year-on-year appreciation that is currently cushioning retail produce prices."Bank of Canada governor Mark Carney warned yesterday that along with food and energy price inflation, it's also going to cost more to borrow money, though he suggested more interest rate relief is comingThe bank's Monetary Policy Report reiterated an earlier warning that the U.S. downturn -- it stopped short of calling it a recession -- will be deeper and more protracted than it anticipated only three months ago and that, in turn, the Canadian economy will weaken.The driving public was certainly feeling the effects of gas price inflation this week. The price of diesel peaked yesterday in Churchill Falls, N.L., at more than $1.50 a litre, according to . Regular gasoline in that Labrador community hit a high of 143.6 cents a litre, and averaged $1.24 a litre across Canada yesterday., a website that tracks pump rates in the capital region, indicated a high of $1.24 a litre for gasoline at an Ultramar station in Gatineau yesterday morning.Most rates in Ottawa were in the $1.21-per-litre range, with a Shell station in Centretown reaching $1.23 yesterday afternoon. Gas stations in other parts of Eastern Ontario ranged from $1.17 to $1.19 per litre. ................
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