When the commodities go up and the cost of transportation is going up, and the value of the dollar is going down, it's all going to translate to an 8 to 10 percent rise in food prices.
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Over time, there's a very close correlation between what happens to the dollar and what happens to the price of oil. When the dollar gets week, the price of oil, which, as you know, and other commodities are denominated in dollars, they go up. We saw it in the '70s, when the dollar was savagely weakened.
The problem of the food price is structural. The growth of demand cannot be checked in that it is coming from middle income countries demanding more quality and more quantity of food. High demand is here to stay.
As you know, low demand and high supply means a drop in value of anything, including the dollar.
The exchangeable value of all commodities, rises as the difficulties of their production increase.
Global fuel and consumption, however, is projected to increase by 100 to 150 percent over the next 20 years, driven largely by the rapidly growing Chinese and Indian economies; and this growth and this increase in demand will force prices even higher.
The price of every thing rises and falls from time to time and place to place; and with every such change the purchasing power of money changes so far as that thing goes.
Prices have stayed up because people in control of supply decided they could keep them up.
Any commodity that sees its price going higher will see new mines opening up. When the supply increases, the prices soften. When prices fall, some mines with higher production costs will shut down as they become unviable.
The prices of all imports would rise if the dollar depreciates.
The history of the twentieth century - America's century! - has been pretty much a history of rising prices.
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