A measure of wheat for a
penny: food price inflation in
historical perspective
- speech by Andrew Bailey
Henry Plumb Memorial Lecture
20 November 2023
Speech
Many thanks for the introduction, Terry. It is a pleasure to be here this evening. Let me
also add my thanks to you, Minette. You have been a strong and clear voice for British
farming throughout your term as President of the National Farmers' Union. What a time it
has been. Costs have been rising sharply. Trading arrangements and farm support have
been changing. Summer droughts have been followed by winter floods. It is no small job
to confront all of those challenges.
I would like to spend my time this evening talking about food price inflation.
To set the scene, I will start by showing a chart with the evolution of overall consumer
price inflation over the past five years. Chart 1 shows how inflation (the white line) fell
Bank's
below the 2% target in the first year of the pandemic before it started to rise above
the target in the second half of 2021, reaching a peak of 11.1% in October 2022. It shows
how inflation has since come down significantly again, to 4.6% in the latest data for
October published last week. In the shaded area, it shows how we expect it to remain
around this level for the remainder of the year. In our forecast, it then continues to fall
back towards the 2% target over next year.
Last week's data release was good news.
It means that we are on track to bring inflation
down to target. But it is too soon to declare victory. We still have a long way to go.
Interest rates will have to stay high enough for long enough to make sure we get all the
way back to the 2% target.
ontr t ons to n lat on and onetar ol e ort ro e t on
Bloom erg nan e L. . e artment or nerg e r t and et ero and Bank al lat ons
The coloured bars in the chart show contributions to headline inflation from different
groups of items in the consumer price index. There has been a big direct contribution from
energy prices (in dark orange), from core goods (in blue) and increasingly from services (in
yellow). The purple bars show that the contribution from food price inflation has been
significant too over the past two years. When annual inflation in the prices of food and
non-alcoholic beverages reached a peak of 19.1% in March this year, it contributed more
than 2 percentage points to overall inflation.
Fortunately, food price inflation is now easing. It fell to 10.1% in October, and we expect it
to fall further, probably to about 3% by the end of our short-term forecast in March next
year. This also means that we expect food price inflation to contribute less to headline
inflation, as illustrated by the narrowing purple bars in the shaded area of the chart.
The rise in consumer food prices has been a global phenomenon, caused not least by
ss a's llegal war on Ukra ne.
When it started in February 2022, we expected that the
war would cause supply chain disruptions and lead to a sharp rise in global agricultural
commodity price. Both Russia and Ukraine are big agricultural producers in global
markets. But UK food price inflation rose higher and faster, and has taken longer to come
down, than past relationships with agricultural commodity prices would have suggested.
So I have spent a lot of my time over the past two years talking to people across the food
- travell ng w th the Bank's agents a ross
industry to understand what has been going on
the regions and nations of the United Kingdom, and visiting businesses operating in
different stages of the food supply chain.
It was clear from these conversations that many people in the industry expected consumer
food price inflation to come back down when agricultural commodity prices started to fall
again towards the end of 2022. Supermarkets tended to tell us that food price inflation had
now peaked.
Farmers were more sceptical. Farmers told us that they were facing higher costs of
energy, fuel, fertiliser, feed, haulage, and labour. As they had often bought key inputs
forward on fixed-term contracts, costs would remain elevated, and these costs would have
to be covered somehow to sustain production.
I have to say that the farmers appear to have been right.
Bank's onetar
This shows just how important it is for me and my colleagues on the
Policy Committee to learn from people across all sectors of the economy as we set interest
rates to return inflation to target. When it comes to the outlook for food prices, a sizeable
chunk of the consumer price index, there has been no more reliable source than British
farmers.
So I am absolutely delighted to be here today to honour Henry Plumb, one of British
arm ng's greatest ham
ons. Baron Plumb, as he became, saw many changes in his
long and remarkable life. Farming was transformed by technology and politics, constantly
challenged by the ups and downs in global markets, and Lord Plumb was at the heart of
the storm working passionately for the interests of British farmers and rural communities.
newl ele ted res dent o the at onal armers' Un on
In 1970, as the answer he gave
to "allow o r own armers the o ort n t o earn ng a reasona le r e to ens re
was
adeq ate rod t on n o r own o ntr s de."1 ears later "[ ]armers
As he wrote seven
are optimists by nature, even though [they] are so often frustrated and confused by outside
n l en es."2
Those outside influences have been many over the years. A memorial lecture is a good
opportunity to look back at them and take a long perspective. That is what I would like to
do today.
Food inflation over the (very) long run
In the United Kingdom we are lucky that the data allow us to take a very long perspective.
rom the Bank's dataset
Chart 2 shows a consumer price index (in orange) derived
onta n ng m llenn m o ma roe onom
'A data'.3 The index goes back to 1086, the year
of the Doomsday Book survey. This was before online forms and telephone interviews, of
course, and by all accounts response rates were high. Let us not speculate on the
incentive mechanisms in place. The data sources become sparser in the subsequent
century but thanks to the painstaking work of economic historians, we can trace consumer
prices again with some confidence from the early 1200s.
Bank's own
From the records, we can find snapshots of this long development. Invoices
kept in our archives show that, in 1713 for example, the Bank was paying two old pence
- -
for a loaf of white bread something of a luxury at the time and a shilling and one old
pence per pound of butter. Converting these numbers into the new pence we use today,
this is about 0.8 and 5.4 pence, respectively. In turn, the difference to the £1.55 and £3.45
demanded by a supermarket on Cheapside in the City of London this morning reflects
-
inflation over the past three centuries the increase in the nominal prices charged for real
- -
goods such as bread and butter over the years.
ons mer r es ndex and agr lt ral r e ndex
A m llenn m o ma roe onom data and Bank al lat ons (see Annex
The chart also shows agricultural prices back to 1209 (in blue), incidentally the year
King John was excommunicated by the Pope. The trend in the general level of prices
moved closely with agricultural prices over the following seven centuries. Agricultural
products, such as wheat and barley, were important inputs into bread and beer. And
bread and beer were large components of the consumption basket. In the medieval
period, food products amounted to as much as three quarters of overall expenditure.
In the late 19th century consumer and agricultural prices started to diverge. From around
this time, agricultural prices grew more slowly than other consumer prices. The share of
food in overall consumption fell as increasing prosperity allowed people to enjoy more
ons m t on than l e's essent als. And te hnolog al advan es
and international trade led
to significant efficiency gains in food production and distribution, from tractors in the fields,
through industrial bakeries to the supermarkets that sprang up across the country.
The linkages between the price of wheat and the price of bread are a good example of
how production technology and supply chains have changed. For centuries, as Chart 3
shows, the price of bread was closely tied to the price of wheat. There was a
technological element to this. Milling and baking were largely localised activities in the
medieval period, and wheat was the most important input into the production of bread. But
as ever in farming, state regulation and control played a role too. From medieval times
until amended by the Bread Act of 1822, the Assize of Bread regulated the price and
quality of bread. In London in 1797, the cost of wheat made up around 80% of the full cost
of a loaf according to the regulators.4 The result was that the prices of both wheat and
bread moved broadly in line with each other and with the overall consumer price level.
r es o wheat and read relat ve to headl ne ons mer r es
Bank al lat ons (see Annex
In the first half of the 19th century, the Corn Laws amended older restrictions and tariffs
associated with the import of wheat, supporting the price of wheat for farmers as well as
raising the price of bread for consumers. The yellow bars on Chart 4 show the duties that
had to be paid, in old shillings per Imperial quarter. When the Corn Laws were repealed
and the duties fell away, relative UK wheat prices fell as the UK wheat price (in blue)
converged on the significantly lower price of wheat in global markets, as represented here
by the US wheat price (in orange).5 That convergence also reflected lower transport costs
internationally and increasing production of wheat in the United States, Canada and
rom wh h the Un ted K ngdom's n reas ng m orts o wheat were now
Argentina
sourced. Indeed, the wheat market in the late 19th century was, if anything, a more stable
and integrated global commodity market than it was for much of the 20th century. In the
ven toda 's
20th century, prices often diverged across markets and volatility increased.6
commodity markets look increasingly fragmented in comparison.
UK and U wheat r es w th m l ed d t es nder the orn Laws
Bank al lat ons (see Annex
Bread prices also fell relative to consumer prices in the period leading up to the first world
war but to a lesser extent than wheat.7 In 1925, the Royal Commission on food prices
calculated that wheat accounted for around 40% of the cost of a representative loaf,
around half of what it had been a century earlier.8 Energy, transport and labour costs were
now becoming increasingly important components in the costs of producing and
distributing bread to consumers.
When war time restrictions were lifted in 1956, the relative prices of wheat and bread
began to move in different directions, as Chart 3 showed. Fluctuations in wheat prices
were still important. But bakers were now free to set prices and diversify the products they
offered to ever more demanding consumers. The range and quality of bread increased.
The price of an unpackaged white loaf, typically produced by a smaller specialist bakery,
has increased by more over the past 50 years than a sliced white loaf in the supermarket.
And other inputs continued to become more important. In 2021, the value of wheat in an
800g loaf of bread stood at an estimated 11% of the total cost.9
So today, when we think about the drivers of food prices, we need to consider the whole
range of commodities and other inputs that feed into the production chain. My colleague
Swati Dhingra has described this chain in detail in a speech earlier this year.10 As Swati
points out, the link between agricultural commodity price increases and consumer food
prices now works through complex integrated supply chains.
What is also noticeable is how different agricultural commodity prices have tended to move
together with other commodity prices historically. Chart 5 shows rolling 3-year standard
deviations of agricultural commodity inflation (in blue), metals (in purple), and overall
-
commodity price inflation (in orange) which from the 1960s includes energy and
fertilisers. The commodity price booms in the 1950s and 1970s were as much to do with
agricultural commodities as with energy and raw materials. The most recent spikes in
commodity price volatility stand out somewhat in this picture. Agricultural commodity price
inflation, while significant, has been somewhat less volatile than those in other
commodities over the past two decades. This suggests that the sharp rises in food price
inflation may have been influenced relatively more by these non-agricultural commodities
in this cycle compared to others.
ommod t r e volat l t meas res
Bank al lat ons (see Annex
The Henry Plumb era
Before I turn to the most recent spike in food inflation in more detail, let me add some
reflections on developments since the middle of the previous century. We have better
data sources for this period. And the start of it happens to coincide with the time when
young Henry Plumb took over the farm at Coleshill in Warwickshire from his father and got
involved in the NFU. We are now entering the Henry Plumb era.
This was an era of significant change for British farmers. From annual Farm Price
Reviews under the 1947 Agriculture Act to the Common Agricultural Policy of the
European Community, and then to the start of a new Environmental Land Management
-
scheme Henry Plumb saw it all.
It was also a period of significant change in the distribution, processing and retailing of
food. While the co-operative movement had opened a small number of self-service shops
by 1950, private grocers were still serving their customers behind the counter. But things
the rst
were about to change. From the opening of 'Premier Supermarket' in 1951, in
Streatham in South London, the American model spread fast throughout the United
Kingdom. Supermarket chains came to dominate the food retail landscape we have
today.11
Monetary policy has gone through significant transformations too, not least in response to
the high-inflation episodes in the 1970s. Without a guiding framework, conquering inflation
was a major policy challenge at the time. Since October 1992, UK monetary policy has
been guided by a firm commitment to the inflation target. This is a fundamental change. It
means that monetary policy is designed to avoid a repeat of a situation where external
- -
inflationary influences from food and energy are allowed to become engrained in
persistent inflationary dynamics in the domestic economy. Monetary policy today
responds with force to ensure that inflation returns to the 2% target sustainably.
Chart 6 shows inflation over this period from 1950 to today (white line) with the
contributions from food prices (in orange). It illustrates how food inflation contributed
significantly to high-inflation episodes in both the 1950s and 1970s, and relatively more so
than in the recent episode. The peak in food price inflation itself was much higher in the
1970s, reaching nearly 30%. But it was similar in the 1950s to what we have seen
recently.
ontr t ons to ons mer r e n lat on
and Bank al lat ons
The explanation for why it still contributed more back then, lies in the composition of
consumption. As the blue bars in Chart 7 illustrate, the weight of food and non-alcoholic
beverages in the consumption basket today, 11.9% to be precise, is only about one third of
its value in the 1950s when it was 36.4%. This large share explains why a comparable
rise in food inflation contributed much more to inflation in the 1950s than it has over the
past couple of years.
We ghts n the ons mer r e ndex
and Bank al lat ons
The counterpart to this change is that an increased share of spending now goes to other
goods and services. As living standards have risen, a much bigger share of spending
goes to recreation and culture, eating out, and tourism. It is a striking reflection of social
trends over this period too, that the share of alcohol and tobacco (in orange) has fallen
from 171⁄2% in 1950 to just above 4% today.
But this does not mean that we should underplay the effects of the shock to food prices
that we have experienced. We can look instead at the margin by which food price inflation
-
has exceeded overall inflation as in Chart 8. This is a measure of the relative price effect
of how much more food prices have risen relative to the prices of other goods and
services. When we look at that measure, the recent period looks more severe in the
context of the inflationary episodes of the 20th century. The prices of the essentials in life
have gone up a lot, also relative to other goods and services.
Ga etween ons mer r e n lat on and ood and non al ohol everages n lat on
and Bank al lat ons
And it is important to recognise that underlying the aggregate is a wide range of
experiences at the household level. Chart 9 shows the typical share of food in
consumption for households across the distribution. For the 10% of households that have
the least to spend, expenditure on food makes up more than a quarter of consumption, just
over twice the national average. At the other end of the spectrum, for the 10% of
households that spend the most, the expenditure weight on food is just 6%, about half the
national average.
hare o ho sehold ex end t re on ood ex end t re de le
and Bank al lat ons
When there is a shock to food prices, like the one we have seen recently, the
consequences are not felt equally across society. The poorest are hit the hardest.
The recent experience
The Covid pandemic was a major shock to the global economy. Global agricultural
commodity prices rose by around 20% over 2021, which along with other rising cost
pressures drove up food prices globally.12 This affected food price inflation in the
United Kingdom too. In January 2022, annual food price inflation stood at 4.3%, compared
to an average of just below 11⁄2% over the previous three years.
Harvests had een oor n man o the world's
Poor weather was undoubtedly a factor.
most important agricultural regions. And strained supply chains affected the distribution of
agricultural commodities and food products as well as other goods.13 In the United
Kingdom, a combination of heavy rainfall and droughts had caused the harvested
production of wheat to drop to the lowest level in 40 years in 2020, before rebounding in
2021.14
B t ss a's war on Ukra ne made a ad s t at on m h worse. ss a and Ukra ne are
both major producers of a number of agricultural commodities, including wheat, barley and
sunflower oil. And Russia is a significant supplier of fertiliser nutrients, an essential input
in modern farming. The invasion reduced global supply and increased uncertainty, driving
n the 12 months ollow ng ss a's
up global agricultural commodity prices to new highs.
invasion of Ukraine, food inflation in the United Kingdom rose by more than 13 percentage
points.
Chart 10 illustrates these developments. The dark orange line shows the sharp rise in
agricultural commodity prices, expressed here in the form of an index representing the
level of these prices. The index includes, for example, the prices of wheat and cattle
traded on the Chicago mercantile exchange, and the prices of sugar and coffee traded in
New York. These global prices affect food inflation in the United Kingdom both because
we import a lot of the food we consume and because pricing in global markets affects the
prices British farmers receive. Both UK food import prices (in purple) and UK farmgate
prices (in yellow) rose as well.
nd es o ood r es and osts
atastream e ra and Bank al lat ons
But there is no direct correspondence. The weight of coffee in UK imports is smaller than
in global production, for example, and the global index excludes some items such as fruit
and vegetables. As we know from the time of the Corn Laws, frictions in trade can also
drive a wedge between global and domestic prices. While global agricultural prices fell
back during 2022, UK food import prices and food output prices continued to rise
throughout the year.
The blue line in the chart shows the index of consumer food prices. As consumer food
inflation peaked in March this year, global agricultural commodities had eased significantly,
UK food output prices had levelled off, and import prices soon eased somewhat too. With
this moderation of costs at the wholesale level, the level of food prices stopped rising.
Gradually, the comparison with the level of food prices a year earlier has because more
favourable. Annual food price inflation, in other words, has come down.
But the blue line illustrates an important point. Even as food price inflation is coming
down, the level of food prices is still high. Consumer food prices today are close to
30 per cent higher than at the start of the pandemic. The high cost of food continues be a
major challenge for many people across the country, especially those on lower incomes.
The prices consumers end up paying in local markets, shops and supermarkets are of
-
course also affected by domestic costs added in the final stages of the supply chain such
-
as energy, transport and labour as well as prices at the wholesale level.
Energy costs have been a major factor throughout the food supply chain, however. This is
illustrated in Chart 11. The chart shows an estimate of the indirect effect on consumer
prices through the cost of doing business over the past four years. It is derived from
information on the use of energy at various stages of the supply chain and effectively
tracks how energy costs for businesses have contributed to the prices paid by consumers
for final consumer goods and services. These indirect effects are significant, especially for
food. The blue line shows that, over last winter, more than 1.5 percentage points of food
price inflation can be attributed to higher energy costs in the food supply chain. This is
significantly more than in other sectors of the economy, as illustrated by the indirect effects
on core goods (in orange) and services (in purple).
ontr t on o nd re t energ e e ts to n lat on
and Bank al lat ons
So what should we expect from here?
The blue line in Chart 12 shows annual food price inflation. While it is still high, it has
fallen markedly since its peak in March. And we expect it to continue to fall over the
coming months (shaded area) given easing cost pressures throughout the food supply
chain.
Ann al and ann al sed monthl ood and non al ohol everages n lat on
and Bank al lat ons
But even as we expect food inflation to fall, there are clearly risks as we look ahead to the
months and years ahead. Food inflation can be volatile in the best of days. And climate
change is affecting whether patterns, increasing the risk of poor harvests. New, hardier
crops may become an important source of nutrients globally, but the development of such
variants may be years away. And global economic fragmentation can increase the risk of
spikes in prices when supply fails and countries prioritise local markets.15 The tragic
events in the Middle East have added upside risks to energy prices and through that to the
cost of food production.
Monetary policy cannot prevent such variation. What monetary policy can and must
ensure is that outside influences do not become inside problems. For monetary policy, it is
the outlook for overall consumer price inflation over the medium term that matters. This is
the horizon over which changes in interest rates can return inflation to target. That is why
we must be alert to any second-round effects of higher food and energy prices to the more
persistent components of consumer price inflation, those that are more closely linked to
domestic cost pressures. And that, in turn, is why the MPC pays particular attention to
services price inflation (the yellow bars in Chart 1), along with the tightness of the labour
market and wage developments.
The labour market, despite softening recently, remains tight and wage inflation remains
elevated. The squeeze on real incomes from higher food and energy prices may still be
influencing wage demands. Food prices tend to be very salient to consumers and closely
linked to inflation expectations. So, the evolution of food prices will matter for wage growth
looking ahead.
The continued strength in wage growth has persuaded the MPC to raise slightly its
-
assessment of the so-called equilibrium rate of unemployment the lowest level of
-
unemployment that the economy can sustain without generating inflationary pressures
as well as its estimate of persistence in wage and price inflation. This also reflects
evidence that the labour market is operating less efficiently than before the pandemic in
the sense that people who are unemployed find it harder to find jobs that match their skill
sets and experience amongst the available jobs. Farmers may be the first to note that
producers have found it hard to find the right workers to fill vacancies too.
Firms in the services sector are the most affected by increasing wage costs. And some,
like hotels and restaurants, have also to deal with higher costs of the food they serve their
customers. Services inflation came in a touch lower than expected at 6.6% in October.
But it remains much too high and well above rates of services price inflation seen before
the pandemic.
So, while the inflation data for October released last week were welcome news, it is much
too early to declare victory. Inflation remains too high, and we need to make sure we get it
all the way down to the 2% target.
Monetary policy is currently restrictive in the sense that, if we maintain this stance for long
enough, we will squeeze inflation out of the system. That is what we will do. This also
means being on watch for further signs of inflation persistence that may require interest
rates to rise again. How long a restrictive stance will be needed will ultimately depend on
what the incoming data tell us about the outlook for overall consumer price inflation over
The 's latest ro e t ons nd ate that monetar ol s l kel to
the medium term.
need to be restrictive for quite some time yet.
Let me be very clear: it is far too early to be thinking about rate cuts.
Central bankers are perhaps pessimistic by nature. Like farmers, we have to deal with a
multitude of outside influences. And when inflation is high, we take no chances.
Returning inflation to the 2% target remains our absolute priority.
I am very grateful to to Nissany Ayathurai, Alex Golledge, Karen Jude, Zaar Khan,
Liane MacIver, Clair Mills and Hela Mrabet for their helpful contributions, and to
Swati Dhingra, Megan Greene, Andrew Hauser and Catherine L. Mann for valuable
comments. Particular thanks are due to Rupert de Vincent-Humphreys, Martin Seneca
and Ryland Thomas for their assistance in preparing this lecture.
Annex
This Annex explains the construction of data in Charts 1 to 11.
For the historical data in Charts 2 to 5, where series are not sourced from version 3.1 of
the Millennium of Macroeconomic Dataset (Thomas and Dimsdale, 2017), hyperlinks are
provided to the underlying data sources where possible. The updated series used here
will be included in the forthcoming version 4.0 of the dataset but are available in advance
of that by contacting ryland.thomas@bankofengland.co.uk.
Chart 1
The chart is and updated version of Chart 2.16 in the November 2023 Monetary Policy
Report. Figures in parentheses are CPI basket weights in 2023. Data are to October
2023. The shaded area includes Bank staff short-term projections from November 2023 to
ar h 2024 and the 's q arterl n lat on ro e t ons rom 2024 Q4 (d amonds .
Chart 2
(i) Consumer Prices, 1086-present
From 1209, the index of consumer prices combines various historical estimates available
in Thomas and Dimsdale (2017) augmented by some additional data that allow a closer
consistency with the current official Consumer Price Index (CPI) measure that begins in
1988. The CPI is a weighted average of different prices based on the expenditure patterns
o the total ho sehold se tor t t ex l des owner o ers' ho s ng
osts. From 1209
to 1830, the series is based on the domestic expenditure deflator of Clark (2010, 2015)
which is the closest available measure to the current CPI; from 1830 to 1949, it uses the
ons mers' ex end t re de lator ased on
Deane (1968); Feinstein (1972) and Sefton
ers' ho s ng osts s ng add t onal
and Weale (1995), adjusted to exclude owner-o
information about rents and housing tenure from Singer (1941), Swenarton and Taylor
and from 1949, it uses the long-run CPI index recently produced
(1985) Holmans (2005);
by the Office for National Statistics. Between 1086 and 1209, the price index is a trend
measure based on a more limited set of commodities based on Barratt (1996, 2001),
and Mayhew (2013). The data are linked and indexed to 1913=100.
Alternative measures of consumer prices such as cost of living indices based on the
expenditure weights of wage earners can be found in Thomas and Dimsdale (2017).
Lennard and Thomas (2023) construct a measure consistent with the current CPIH index
which includes owner-occupier housing costs.
(ii) Agricultural Prices, 1209-present
The Agricultural price index from 1209 up to 1867 is based on the index constructed by
Clark (2004) which weights together separate indices for arable, meat, dairy, wool,
pasture and wood. From 1867 it uses the chain-linked index of prices of Turner (1992).
From 1914 the agricultural price index available in
A Century of Agricultural Statisitics
(1966) is used, and is extended to 1988 using various editions of the Annual Abstract of
Statistics. From 1988 the data are sourced from the Agricultural datasets provided by
DEFRA. The data are linked and index to 1913=100.
Chart 3
(i) British Wheat Prices
Wheat Prices from 1545-1870 are those constructed by Clark (2004) from a number of
underlying historical sources. From 1870 to 1963 the series is obtained from A Century
of Agricultural Statisitics (1966). From 1963 to 1973 the series is obtained from Mitchell
(1988). From 1973 to 1988 the series is taken from the Annual Abstract of Statistics.
From 1988 the producer price of wheat is taken from the agricultural price indices
produced by The data series are linked, divided by the Consumer price index
DEFRA.
from Chart 2 to create the relative price and indexed to 1600=100. A 10-year moving
average is shown in the chart.
(ii) Bread Prices
From 1545 to 1914 the data are based on the London price of bread for a 4lb loaf sourced
from Mitchell (1988). From 1914 the ONS series for the average price of an unwrapped
white loaf (CDID: CZOG) is used and from 1968 the series for the average price of a sliced
white loaf (CDID: CZOH). The data series are linked, divided by the Consumer price index
from Chart 2 to create the relative price and indexed to 1600=100. A 10-year moving
average is shown in the chart.
Chart 4
Care must be taken in comparing the levels of the UK and US wheat price series. The UK
and US series refer to different types and quality of wheat and so an observed equivalence
in price does not necessarily reflect a true equivalence when adjusted for quality. But the
series do show the overall trends in convergence between UK and US prices in the from
the second half of the C19th onwards.
(i) British Wheat Prices.
As in Chart 3 except these data are all expressed in shillings per Imperial quarter. Where
necessary the more modern data has been converted into the older Imperial measure.
(ii) US Wheat Prices.
From 1841 to 1951 the prices are taken from the NBER microhistory dataset, chapter 4.
From 1952 to 1989 the prices are taken from the Historical Statistics of the United
States Millennial Edition. From 1990 to the present the data are taken from the IMF
PCPS system and refer to the price of No.1 Hard Red Winter, ordinary protein, Kansas
City. For comparability with the British data the series have been converted into old
shillings per Imperial quarter.
(iii) Implied duty under the Corn Laws
The implied duty on wheat under the Corn Laws in shillings per imperial quarter is taken
from Sharp (2010). This series is the implied level of duty under the sliding scale given
the annual wheat price. The duty charged was generally lower when the price of wheat
was higher. Sharp (2010) discusses the issues with constructing the implied ad valorem
tariff given the workings of the sliding scale which was recalculated on a weekly basis.
Note after 1849 a fixed nominal registration duty remained in effect until 1868.
Chart 5
The volatility of commodity price is measured as a 3-year moving average of 12-month
inflation rates. From 1960 the monthly commodity prices are sourced from the World Bank
Pink Book. P