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As the UK announced the inflation rate increasing to 4%, data released by the World Bank revealed 44 million people have been thrown into poverty since last summer as a result of rising food prices.

The inflation increase made the headlines today as Mervyn King, the Bank of England Governor will be expected to write to the Chancellor of the Exchequer, George Osborne, explaining why inflation remains about the target level of 2%.

Mr Osborne, in an interview with the BBC blamed in part rising commodity prices on the increased level of inflation.

Yet the Guardian economics editor, Larry Elliott, picked up another angle on the effects of rising commodity prices, although the issue has been pressing for some time now.

Rising food prices will push more people into poverty (World Bank)

According to Index Mundi, an internet market data provider wheat prices have almost doubled year-on-year.

But how does rising commodity prices such as the price of wheat affect people on the ground?

Last week I wrote about high inflation in Egypt contributing to unrest, which is exactly what Elliot draws from Robert Zoellick, the current World Bank President in the Guardian article.

Rising commodity prices passes increased charges to importing countries, causing inflation. This means the price of products will go up to meet the cost of importing commodities and pass this on to the consumer. If wages and interest on savings do not stay in line with inflation, they are gradually eroded and relative wages fall.

But the problem of rising food prices could be exacerbated by the worst drought in China for over 60 years, according to a recent report in this week’s Economist. It writes, if China, which is traditionally self-sufficient in grains, could set wheat prices to rocket should the country start to import wheat.

As global markets are interconnected, rising prices will not only affect us in the UK (and in Wales) as we see petrol prices and food charges going up, but developing countries will be hit even harder as those with little struggle to keep up with rising prices.

Coupled with the rise in Brent crude oil, we should expect Mr King to be writing letters to the government for the foreseeable future.

As protesters erupt on the streets of Cairo for the seventh day in a row, political pressure is mounting on Egyptian President Hosni Mubarak to step down after a 30 year autocratic rule.

Photo by Muhammad

While the geopolitical implications for the region are monumental (as Egypt is supported with American aid in part for its favourable relationship with Israel which could change under a new government) the dual force of inspiration from events in Tunisia and economic woe has pushed the north African country to the brink of revolution.

Live twitter feeds and video have made events exciting to watch unfold on the TV or on the laptop, listening to updates from BBC correspondent Jeremy Bowen or Channel four’s John Snow. But behind all the pictures fed through by the media much is at stake.

Dividends have failed to filter down to the Egyptian people despite the country experiencing GDP growth of over 5 per cent in 2010, meanwhile high inflation (around 12.8 per cent) and rising unemployment have caused discontent with the those in and out of work.

And now, tens of thousands of Egyptians are standing up to say they have had enough of the same.

Things may just be about to change – and Egyptians hope it will be for the better, with greater economic prosperity and greater democracy to improve their lives.

But there is one other issue I would like to investigate: do the events in Egypt affect us in the UK or indeed in Wales?

When I visited Cairo in the summer of 2010, our tour guides were predicting an uprising against Mubarak as we passed through what seemed a chaotic city centre with growing unemployment, a place where 20 per cent of the population live below the poverty line.

Of course the tourism industry will take a hit, with over 20,000 British citizens stranded in the country while others holidaymakers and business travellers have been advised by the FCO to avoid making the trip except in urgent circumstances.

The BBC made this clear earlier today. Meanwhile the Financial Times reported yesterday that businesses have started to evacuate staff. Investors look on nervously as shares fell in Cairo by 16% in two days last week.

Similarly, the political unrest in Egypt, which has moderate oil reserves yet its Suez canal acts as an important thoroughfare for oil and gas, have also pushed up the price of it to over $100 a barrel, which will inevitably push fuel prices up in the UK if they are sustained at this high level for any great length of time.

In fact, David Cameron on today’s BBC breakfast show hinted he could introduce a “fuel stabiliser” to help reduce prices for fuel motorists have to pay when asked about the effects of events in Egypt on fuel prices.

So while I watch updates stream through on Twitter, events unfolding in Egypt have reminded me of the importance of economic policy and geopolitics, and their impact on the lives of everyday people on the ground.

Whatever unfolds in the next few days will not only make history of or for President Mubarak, but it will send ripples through neighbouring north-African countries into OPEC, international trade, UK motorists and most importantly, the lives of everyday Egyptians.