Don't blame ethanol for inflation

I thought this story was very interesting, especially in the light of the recent increase in world commodity prices.

CHICAGO (Reuters) - U.S. food inflation is rising but don't blame the ethanol-based boom in corn prices, the head of global agriculture and food-industry research firm Informa Economics said on Monday.

Memphis, Tennessee-based Informa, formerly called Sparks Companies, said a study based on 20 years of price data shows that corn prices have minimal impact on the U.S. Consumer Price Index for food, which has been on the rise.

The study, released on Monday, "debunks the concept that the ethanol expansion is the underlying and main significant reason for food price increases," Bruce Scherr, Informa's chief executive, told Reuters in an interview.

"We're not saying that corn prices are cheap, that ethanol hasn't helped underpin the growth in the corn economy," Scherr said. "What we are saying is to blame corn and corn-based ethanol for all of the inflation associated with food and food prices ... is to grossly under-consider all the other forces at work."

The CPI for food, a broadly used gauge for inflation, is up almost 6 percent for the first nine months of 2007, with the food inflation pace at a 25-year high, industry analysts said. Many have blamed the rising price of food on raw commodity prices which have soared to multiyear highs in 2007.