Faced by the prospect of his impending death, Boris, the character played by Woody Allen in his film Love and Death, finds his mind returning, time and again, to the harvest: “The crops, the grains. Fields of rippling wheat,” he says. “Oh, wheat! Lots of wheat! Fields of Wheat . . . Wheat. All there is in life is wheat.”

Boris’s preoccupation looks likely to become increasingly common in the years ahead. Premier Foods has raised the price of Hovis bread by 8p so that, in some places, an average loaf may now cost more than £1. This is not just a reaction to the fact that wheat prices have risen by nearly 50 per cent in the past three months, but a harbinger of higher food prices to come. For it is not just the cost of a tonne of wheat that is going up. The price of corn, rice and barley have all risen by over a third since 2005. After the long slump in commodities prices, the world is waking up to agflation.

There are three causes of increasing costs of foodstuffs. First, demographics: the populations of India and China not only account for roughly 2.4 billion people, and rising, but also a rapidly expanding middle class with the money to fund larger appetites. Second, climate change: extreme hot and cold weather has resulted in unpredictable harvests, which have contributed to the depletion of wheat stocks to their lowest levels in 25 years. Third, biofuels: the response to climate change, namely the reallocation of huge acreages previously used to grow corn for animal feed and human consumption to grow corn and sugar for ethanol, has robbed the world market of vast tracts of food-producing farmland. Premier Foods could not explain yesterday which of these three factors was having the most impact on wheat prices. The most immediate cause, it said, was biofuels: “What you have is an environmental tax on food.”

These days, the higher cost of Hovis is not likely to drive people to the streets. But it will have a pervasive impact. The return of goods inflation – ie, the rising prices of the kinds of products that everyone buys – adds to the pressures on monetary policymakers at the Bank of England.

Food prices will stir debate about the unintended consequences of the green revolution. The danger is that this causes a backlash against climate-friendly sources of energy, rather than a sober debate about the trade distortions and economic inefficiencies of – particularly US - investment in home-grown biofuels. The answer is not to stop producing ethanol, but to choose how it is produced and where both corn and sugar are grown. This may be a problem caused by globalisation, but the best prospects of a solution lie with further trade liberalisation.

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