Fun with numbers: The £18 pint of beer

Friends of the Earth explain how they calculated that a loaf of bread would cost £6.50 and a pint of beer £18 in 21 years time here:

The price of staple foods is set to rocket four and a half times above normal inflation (1) because the changing climate will put extra stress on land and resources around the world, exacerbating the existing food crisis...

Spiralling costs of basics like bread, rice and pasta will mean that many million (2) more people will struggle to buy enough food to keep healthy.

The figures have been produced by Ray Hammond, a leading expert in predicting future social and economic trends and Visiting Lecturer at the University of Oxford's Institute for the Future of Humanity. He modeled the future prices of consumer foodstuffs for Friends of the Earth using previous price hikes (3) recorded by the World Bank and projections by the International Food Policy Research Institute.

Projected prices of other staple foods in 2030 include:
£6.48 for a 800g loaf of white bread (now 72p, would be £1.44 with normal inflation)...
£18.45 for a pint of Pilsner lager (now £2.05, would be £4.05 with normal inflation)

(1) If they assume that prices will double in 21 years anyway, that equates to underlying annual inflation of 3.4% =(2^(1/21))-1. For bread to rise to 4.5 times its current price, the annual inflation would be 7.4% =(4.5^(1/21))-1. So the phrase "four and a half times above normal inflation" was clearly penned by somebody who has no idea what he is talking about; that looks more like "food prices will increase at twice the normal rate of inflation" to me.

(2) At those prices, half the world's population would have starved to death, so they mean "billions" not "many million". Twats.

(3) We know that the price of a loaf has increased a lot over the past few years:
1970 - 9p
1980 - 33p
1990 - 50p
2000 - 52p
2007 - 94p

i.e. it's doubled over the last ten years (annual inflation 7%). So if we use the last ten years to predict the next twenty, a £6.48 loaf is not entirely unfeasible (see also point 4 below).

But the further back you look, the less dramatic the increase. In fact, the price of a loaf increased more or less exactly in line with inflation between 1970 and 2007. So if you use the last forty years to predict the next twenty, we'd expect a loaf to cost £1.44 in 2030.

So far so bad.

I'd guess that the cost of wheat is a large part of the cost of bread, so the price of a loaf must track the price of wheat. But the cost of the ingredients in a pint of beer are negligible - five pence or ten pence, perhaps - the rest is brewing, bottling/canning, transport and taxes. So even if the price of those ingredients went up ten-fold, that doesn't have to add more than 50p or £1 to the price of a pint (assuming other costs and taxes remain the same).

(4) People from Oxford have got form for this, i..e Professor Stephen Nickell who predicted house prices twenty years into the futures on the basis of the last few years' increases and bravely predicted that an average house would cost ten times average earnings by 2026.