Outside a Co-op supermarket in Edinburgh on Friday, I met three sisters, all doing their shopping for this weekend. In their baskets were tins, mainly - Ambrosia creamed rice and minted peas. They were peering at stickers and examining labels with the look of hardened sceptics.

'Terrible, just terrible,' said Betty Pryde, at 82 the eldest of the three. 'Look at the price of these eggs.' They were free range, and cost £1.28 for six - 60 per cent more than in most supermarkets a year ago. 'Everything's gone up.'

The sisters live apart but they often shop together, pooling their state pensions. Jean, 78, the youngest, said she doesn't bother looking at the prices, she just gets what she needs. Her older sisters looked at her as if she had just said something naughty. 'Oh no, you've got to watch the prices - bread, milk, everything, it's all going up,' said Nan, 79. And they all agreed their weekly shopping bill was up a good 10 per cent on last year, although the cost of gas and electricity was more of a worry to them.

'It's the price of oil, isn't it? And the bad weather?' said Nan, musing over the reason for the price rises. 'The shops, they all like a profit well over the score,' added Jean. 'Aye, well, I must get on,' said Betty. Clearly this was the wrong moment for a long chat. 'I want a bit of fish for my supper, and I imagine that's gone through the roof, too.'

When they had gone, the Co-op in Easter Road, Leith, was as empty as a church on Monday. But the discount grocery store Lidl, a block away in the Kirkgate shopping centre, was throbbing. Poundstretcher next door was packed, as was the discount frozen foods store, Farm Foods. And no wonder - food prices are rising faster than they have at any time since the mid-1970s. The middle class in Britain has barely noticed, but here in one of the poorer corners of Scotland, people are feeling the pain.

Everyone in the stripped-down warehouse of Lidl, where the posters promise, simply enough, '40 per cent cheaper!', had a story to tell. Shubnam Rasoul, 23, out shopping with her husband, Shahid, and their two small children, said: 'I never buy anything for myself any more. And I never buy anything that's full price - it's all in the sales.' Shahid, who works in a Leith butcher's shop, said that the price of their lamb is up 10 per cent since last month. 'We spend £200 a month now on groceries for the family,' he complained. Probably 25 per cent more on a year ago. It's frightening'.

While a litre of orange juice is 57p in Lidl, it sells for 99p in the Co-op. Such products, and staple foods like eggs, bread, frozen peas, butter and cheese have seen price rises of between 20 and 30 per cent in mainstream supermarkets. Mysupermarket.co.uk, which collates supermarket prices daily, puts the overall rise last year at 12 per cent. That means the average family's shopping bill has gone up by £750 a year.

From Lidl, I went to another food shop, only a mile from Leith, but a planet away in every other way. Occupying part of a terrace in the grandeur of Edinburgh's New Town, Herbie's is a fittingly stylish grocer/cafe - the sort of place where they don't put price labels on the goods in the chill cabinet because, presumably, no one is particularly bothered. If you do ask, a pint of milk here costs 75p - in Lidl it's 32p.

I was introduced to five obviously middle-class Edinburgh women, the fundraising committee of the PTA for one of the city's private schools. They were having a meeting over cappuccinos. Did any of them know how much a pint of supermarket milk cost, I asked. Eighty pence at Waitrose, said one confidently, and the others nodded. And how much has the price gone up? Not much: it's about the same, they all agreed. In fact a pint of milk costs 40p at the supermarket, and is up by 15-20 per cent on a year ago.

Two of the women - none wanted to be named - didn't think food prices had gone up noticeably. But the other three weren't so sure. They'd seen a difference in their weekly shopping bills. 'Tesco deliver,' said one. 'We're vegetarians and it's usually the same order. And it's usually £180. But it's been £200 lately. Another laughed: 'My husband's certainly noticed we're spending more.'

'Do you know,' says the third, 'I have actually started looking at labels in the supermarket. Prices per kilo, and so on.' Everyone smiles - how absurd it seems.

'It's going to be interesting,' says James Walton, chief economist with the food retail industry's education body, IDG. 'UK shoppers aged under 50 have so far never experienced food-price inflation.' Essentially, throughout most Britons' lifetimes, food has become cheaper. But, in December, the inflation rate (by the government's preferred consumer price index, the CPI) was 2.1 per cent, while for all foods it was 5.9 per cent. 'Habits will change, although it's unlikely we're going to see Soviet-style queues at empty shelves.'

However, label-watching may become a habit for those Edinburgh women, because - and all the analysts agree on this, if nothing else - this is only the beginning. Walton's organisation is funded by the supermarket industry, whose bosses are, in public, largely in denial about the significance of the price rises. But Walton, himself, forecasts two further years of similar increases, at least. All the indicators, the prices of every food staple, are on the up - wheat doubled in price at one point last year. 'It's something the industry has expected and is thus, hopefully, a manageable cycle,' he says. 'No hunger riots. But we have enjoyed food prosperity for a long time, and we're seeing the end of that.'

Others offer an even more bleak assessment. Jacques Diouf, head of the UN's Food and Agriculture Organisation, spoke recently of a 'very serious crisis' brought about by the rise in food prices and the rise in the oil price. Various global economic bodies are forecasting rises of between 10 per cent and 50 per cent over the next decade.

There have already been riots about food prices in Mexico, West Bengal, Morocco, Senegal and Yemen, although not in Edinburgh. But the factors behind the price rises in Leith are exactly the same as those in Mexico, or in China - where, last Wednesday, the government introduced price controls on dairy products, meat, vegetables and cereals. And while food price inflation hit 18 per cent last year in China, there's no good reason why they should not do that here. In fact, there are a lot of reasons why they should.

There have been four chief drivers of food price inflation in the last two years. The first is the huge rise in oil prices: $100 a barrel means food that is four-times as expensive to plant, irrigate, harvest and transport as it was six years ago. Some commodities brokers are now betting on oil going to $200 a barrel within a decade.

The second factor is the climate: drought, hurricanes and floods around the world last year made for terrible harvests - from Australia to the Caribbean and the United Kingdom. The third is the massive rise in the price of the staple-food commodities: wheat, maize and soya. This has been partly driven by speculation in the markets, partly by the demand for crops to turn into fuel.

Ethanol, a diesel-type fuel made from plants, must bear a lot of the blame. Since George Bush announced a rush to corn-based ethanol it's done well for American corn farmers - 20 per cent of whose harvest, subsidised by the government, went into fuel tanks rather than flour mills this year. Bush's taste for corn-based ethanol is based partly on trying to break the US's reliance on Middle East oil suppliers, and partly on a (largely misplaced) faith in its ecological credentials. (Its increasingly voluble critics claim that growing grain and then transforming it into ethanol requires more energy from fossil fuels than ethanol generates.)

And, as a result of the vast tracts of farmland now being given over to corn for ethanol production, the price has risen sharply. Hence the tortilla riots in Mexico, last summer, over the price rise in the corn flour that makes the pancakes. Some claim that there is now a war between the 850 million chronically hungry of the world and the 800 million motorists - all fighting for the same food crop. It's a pretty unbalanced battle: the maize to fill a tank for a 'Chelsea tractor' would feed a family of four for three months. In October the United Nations' spokesman on famine, Jean Ziegler, called the biofuel boom 'a crime against humanity'. And as the Economist magazine recently noted: 'The 30 million tonnes of extra corn going to ethanol this year amounts to half the fall in the world's overall grain stocks.'

Last week, after a mass protest at the price of soya beans in Indonesia (which rose because of the shortage of corn and other crops to supply the biofuel industry), Ashok Gulati, director at the International Food Policy Research Institute said: 'It's finally a trade-off between filling stomachs and filling diesel tanks in cars and trucks.'

But the last, and perhaps the most disturbing factor in the food price rise, is the financial boom in India and China. Around the world, and through history, people have eaten more meat as they have become richer. This is called the nutrition transition and it's now happening, very quickly, in the two most populous nations on the planet.

Hundreds of millions more people are now rich enough to eat meat compared with 10 years ago, with meat consumption in China more than doubling over the past 20 years. Meat also consumes food resources in a shockingly inefficient way: it takes 8kg of grain to produce 1kg of beef, and 4kg for pork. But each kilo of grain may need a tonne of water. And fuel oil is needed throughout the process, to fertilise the grain, pump water and to transport it.

Water and oil will both be in short supply this century. None of this is a surprise to Tim Lang, professor of food policy at London's City University, and an adviser to the government through the Sustainable Development Commission. 'I've been expecting this for two years', he says. 'The food system is entering a period of very significant restructuring, the first since the years after the Second World War. We may look back at the second half of the last century as an era of cheap food. It'll be like the Hundred Years' War, as we were taught it in school: a seminal moment in human history that's gone and will not return.'

That food is - for the rich world, at least - astonishingly cheap, is undeniable. The average British household spends 13 per cent of its income on food - for our grandparents that figure would have been 30 per cent.

In Lidl at Leith, I met a 75-year-old retired nurse with a basket of vegetables - broccoli, leeks, courgettes - along with apples, vinegar and a tin of condensed milk. 'I make jam and I pickle things,' she explained. 'My daughter thinks I'm mad, but it's a habit. I got married in 1948, when things were still rationed. We appreciated everything we got to eat. Now, we've got used to having too much. We throw so much away. People eat unwisely - they don't plan, they just shop.'

But could there be positive aspects to the food price rises? Some environmentalists believe so, including Tim Smit, founder of the Eden Project, near St Austell in Cornwall. 'Food is ridiculously cheap and we need to pay more - for our environment to be healthy, to cut down on carbon emissions and give more income to our farmers,' he said. 'It's said that 30 per cent of all food produced in Britain is thrown away. We may be getting back to seeing what the real price of food is, and that is healthy for producers and for society.'

So is there a morally preferable price level for food, at which people will value it more, and waste less? Raj Patel, a political economist at Cornell University in California, and author of Stuffed and Starved - on the politics of global food supply - says that allowing the market to set prices to make people behave better is not the answer. 'There are greens who are crowing that the price of food going up is going to benefit the environment and help the small producer,' he says. 'But the benefit of the rises is going to the contractors and the commodity brokers - not to the farmers or to developing world economies. Nor are supermarkets innocent victims of price rises. Sainsbury's and Tesco have recorded double-digit growth in profits last year.'

The supermarkets insist there's no problem. Tesco's finance director, Andrew Higginson, says that 'tales of rampant inflation, based on one or two products, are complete nonsense.' When I asked Sainsbury's about the reported 26 per cent rise in the cost of a basket of its food, it said that its prices overall had actually only risen by 1 per cent in 2007. As an illustration they sent me a list of five items that had become cheaper, including 200g of Sainsbury's mixed olive hummous which was 20 per cent down.

Dismissing 'alarmist predictions,' British Retail Consortium's head, Kevin Hawkins, said last week that 'intense competition between food retailers was continuing to keep prices down, with retailers absorbing much of the impact of increasing costs themselves.'

But as the situation stands today, at least a third of the world - including the populations of China, Russia and India - have government-imposed price limits on their foods.

'That's how it's going, says Lang. 'You can't wriggle out of the facts. There are water shortages, climate change, energy price rises, population demographics, waste. We can't go on eating meat the way we do: the economics of it just won't add up.'

He's not expecting food riots in Britain -yet. 'But we're entering a long period of restructuring, and politicians will have to get involved,' he says. 'For years, successive governments have got used to food prices going down. The "leave it to Tesco" policy has dominated. But that's over. After half a century, food security is on the political agenda again.'

And so, you imagine, is hunger.

One family's trolly trials: 'every week we get less change at the checkout'

Simon Russell and his wife Pauline have found that feeding their two growing boys quality food is becoming increasingly expensive.

Waste manager Simon, 41, office worker Pauline, 43, 11-year-old Liam, 11, and Ben, eight, pictured right, live in Emersons Green, Bristol, near to several major supermarkets. They currently spend around £150 on food, and try to buy good quality meat and fresh vegetables whenever possible.

Typical meals include Pauline's 'spag bol', a good quality homemade fish pie, and a roast with all the trimmings every Sunday. A year ago their weekly food bill was nearer £120, and, Pauline says, it is not just her children's larger appetites that are the problem.

She said: 'You really can see the difference at the checkout week-by-week at the moment. It's not like things have doubled in price, you just get less and less change. I always try and buy quality food, I think very cheap food is a false economy. By the same measure a lot of organic food is overpriced. I try and find a happy medium.

'Children and parents are being told how important good food is, but as prices rise it gets harder to buy the nice things that you want. If you try and stick to the same budget, you just end up with a half-empty shopping trolley.

'I don't go to Sainsbury's very often, although I'd like to, as the quality and range of food there tends to be better than the rest. However, I end up driving further to go to Asda or Morrisons because of the money you save. It could be as much as £10 a week. That may not seem like a lot, and we're not struggling financially, but when you add that up over a year that could pay for a family holiday.

Simon added: 'Family meals are a very important part of our life, and we always sit round the dining table together. I believe in fair trade; farmers and producers deserve to get paid a decent price and to keep short-changing them is unsustainable. But with other prices rising, we have to keep things in perspective and make sacrifices.

'It's not just food prices that are rising. Energy bills are already shooting up and petrol is never going to get any cheaper. All families are going to have to make sensible savings.'

· Read more from Alex Renton and share your views on escalating food prices on Word of Mouth