Russian threat to UK pockets

A Russian ban on exporting grain looks set to heap more pressure on stretched household budgets in the UK.

Russia has seen a severe drought wipe out 20 per cent of its crop.

The ban has caused wheat prices to jump 60 cents to 7.85 dollars a bushel. That is the highest since September 2008.

Hovis breakmaker Premier Foods says it will pass rising prices on to retailers, leading to fears the shelf price for a loaf could rise by up to 10p.

Premier is sourcing all its wheat from British farmers this year and despite a bumper crop expected in the UK, prices will rise in line with the global market.

Russian Prime Minister Vladminir Putin announced the ban on Friday saying it was necessary even though the country has sufficient reserves.

"We need to prevent a rise in domestic food prices, we need to preserve the number of cattle and build up reserves for the next year," Mr Putin said.

Despite the ban Russian farmers have little incentive to export anyway because prices have been rising even faster in Russia than in world markets.

The ban will run from August 15 through to December 31.