Commentary: John R. Block Reports from Washington
Hello, everybody out there in farm country. This radio commentary is brought to you by the National Corn Growers Association, CropLife America, and Renewable Fuels Association. They are all friends, supporters, and allies of a healthy farm economy and prosperous rural America. Thank you.
And now today’s commentary-
Let me open by reading a statement from Rep. Glenn Thompson (R-PA): “Without a robust rural America, people in the city are going to wake up hungry, and the more I learn about cotton, they’re going to wake up naked, too.” I like that quote. We don’t want the consuming public to forget the essential value of the farmers, ranchers, and whole ag industry.
My subject today will be inflation. We have talked so much about how bad it is, but maybe we can find some hope. According to a global economist at JP Morgan, weaker global demand in the face of diminished purchasing power is helping to lift our foot off the inflation accelerator. Global commodity prices are starting to come down after rising by 9.7% in the second quarter.
Global inflation should be down to 5% in the last half of this year. Hope they are right. We have watched our gasoline prices fall. Crude oil was $120 per bushel in June and now it’s around $93. Food prices fell 1.9% in August. That was the fifth straight monthly decline. Imports of manufactured goods are not going up like they were.
On the other hand, service costs keep going up. It is the labor shortage. And I don’t see it coming down soon. Look at our imports. Excluding autos, import prices fell .5% between April and July. I read an article in the Wall Street Journal which argues that China is helping to ease the price pressure. The world’s second largest economy grew just .4% from a year ago. They have reduced their investment. Their iron-ore prices are down almost 40%. China has chosen to lock down their companies because of Covid-19. China, with excessive supply and weak demand, is not going to drive inflation. The cost of transporting produce both on land and on sea is not as expensive as it was. Supply chain disruptions are not what they were.
There is one big question that could slam the door on the progress we have seen. Expanded war between Ukraine and Russia could spill over into some other countries. If Russia shuts off all oil and gas to Europe, who knows the outcome. The world economy is on a rough ride. It looks like the U.S. is doing better than most.
If you would like to review my radio shows going back more than 20 years, just go online to www.johnblockreports.com.
The views expressed in this editorial are those of the writer and not necessarily those of sfntoday.com nor the Southern Farm Network.