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Sugar giant's move may spark new round of food price rises.

TATE & Lyle yesterday said it had increased the price of corn sugar by up to 20%, in a move that could mark the beginning of a fresh round of price hikes for a range of products from soft drinks to bread.

The ingredients manufacturer said it had been forced to raise the price of corn sugar to maintain its profit margins, following a 40% rise in the cost of corn over the past year.

Corn sugar - also known as high fructose corn syrup - is a cheaper alternative to sugar and is used as an ingredient in many types of food and drink, such as carbonated drinks, salad dressings, condiments, bread and cereal bars.

The rising price of corn sugar is the latest in a string of commodity price rises that have squeezed consumers' spending power in recent months, after cotton doubled in price in the past year, and wheat increased by 40%, adding 10p onto the cost of a loaf.

The Consumer Prices Index (CPI) measure of inflation increased to 3.7% in December, and Bank of England governor Mervyn King warned it could hit 5% this year as strong demand from emerging economies drives up the price of commodities, including food.

Updating on the final three months of 2010, Tate, which last year sold its sugar businesses - including its Tate's Golden Syrup brand - said the rising cost of corn would tie up more of its money and slow its debt repayment plans.

The company, which also makes sweetener Splenda, said it has started to increase profit margins in its industrial starch business, following last year's poor potato harvest.
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Title Annotation:Business
Publication:Daily Post (Liverpool, England)
Date:Feb 2, 2011
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