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First petrol, now food prices starting to soar

THE cost of living is set to soar with hikes in fuel prices, mortgage repayments and groceries.

The cost of petrol looks set to rise to €1.60 per litre by the weekend on top of a 7pc rise in food prices at the till.

Add this to the massive increases in mortgage rates in the months ahead and Irish consumers are set for a long, hard spring.

Major supermarkets have pushed up the cost of some food staples by as much as 7pc in the past eight months.

The average basket of top-selling products has risen by as much as €4.23 per week.

The IMF has warned that the world "may need to get used to higher food prices".

And petrol wholesalers are preparing to introduce a jump of 1c per litre in the price of fuel.

The Irish Petrol Retailers Association said that Esso and Top have made the increase and others are set to follow suit tonight.

Meanwhile, homeowners are facing at least three mortgage rate hikes, as hinted at by a key European Central Bank figure.

This would mean that a €300,000 mortgage repayment would jump by an additional €126 per month.

It's expected that the ECB rate will rise from 1pc to 1.75pc by the end of the year.

Axel Weber, European Central Bank governor, said that he would not disagree with the market view of where the interest rate is heading -- three separate hikes of 0.25pc.

ECB president Jean-Claude Trichet anticipates the first rise to be as early as next month.

Separately, the United Nations FAO index last week outlined that world food prices are at an all-time high.

Wheat and coffee have doubled in cost while cocoa is up 25pc in just two months and dairy prices increased by 4pc last month.

However, the Central Statistics Office has indicated that Irish food prices have remained steady over the past year.

Food and beverage prices have climbed by just 0.3pc in 12 months in Ireland - with notable changes in the cost of flour, cereals, butter and cocoa.

IMF economists have said that a large part f the surge in food prices was due to temporary factors like the weather.

"Nevertheless, the main reason for rising demand for food reflects structural changes in the global economy that will not be reversed," they said.

And there is bad news for motorists.

The Esso garage on Swords Road near Dublin Airport is selling the most expensive unleaded petrol, at €1.59 per litre, while the cheapest was listed at the Xtra Value garage in Castleblayney, Co Monaghan at €1.43 per litre.

But there is a glimmer of hope as world oil prices fell sharply to $113 a barrel, down from $120 last week.

The move came as OPEC countries prepared to boost supplies due to the unrest in Libya.