Market, not bubble, drives food, energy prices higher: Survey

Market, not bubble, drives food, energy prices higher: Survey
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First Published: Fri, May 09 2008. 11 02 AM IST
Updated: Fri, May 09 2008. 11 02 AM IST
AFP
Washington: A surge in food and energy prices is being driven by fundamental market conditions, rather than an investment bubble, according to a Wall Street Journal survey of economists published Thursday.
Fifty one percent respondents said demand from China and India was the prime factor in soaring energy prices, and 40% said demand was the chief contributor to rising food costs.
In the survey, tight supply was cited second most-often for spiraling prices by the 53 respondents. 20% blamed supply problems for higher food prices and 15% for increasing energy prices.
Still, 11% see a potential bubble driven by speculation. “Commodity markets have become a strange safe haven, with prices well out of line with underlying market fundamentals,” Diane Swonk of Mesirow Financial was quoted as saying.
The WSJ survey, conducted last week, found that economists, on an average, expect price of crude to fall to about $105 a barrel by end-June from the current record-high levels above $120 and to decrease to about $93 by year-end.
Sixty percent of respondents said the Federal Reserve is showing enough concern about inflation and that its focus on the risks to growth is the right priority.36% think the credit crisis is over or mostly over, while 62% say “it’s only about half-finished,” the WSJ said.
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First Published: Fri, May 09 2008. 11 02 AM IST
More Topics: World | commodities | food | energy | commodities |