By Elaine Kub
If someone says that commodity prices have "hit a wall," your reaction to that statement really depends on who you are and what economic role commodities play in your life.
If you're a farmer, you think, "I know commodity prices seemed to hit a wall back in 2022, darn it; I wish commodity prices would go back higher and jump that wall." If you're a miner or an oil baron or any other sort of commodity producer, you probably share that same sentiment.
But if, on the other hand, you're a grocery shopper, or someone buying gasoline at a gas station, you think, "I know commodity prices have hit a wall, darn it; they've been going down for the past couple of years and I wish they would keep going down."
Therefore, I had a moment of cognitive dissonance when I read the World Bank Group's Chief Economist Indermit Gill, quoted in the Financial Times, say: "A key force for disinflation -- falling commodity prices -- has essentially hit a wall. That means interest rates could remain higher than currently expected this year and next."
Personally, I don't mind when there's a "wall" preventing grain prices from falling any further. In fact, I would usually give it a friendlier term, like "floor" or "support" or "at least a slim chance of basic profitability for commodity producers."
But a World Bank economist, representing as he does all the globe's commodity consumers in developing countries and everywhere, who must purchase food and fiber and fuel, and must sometimes borrow money to do so, understandably has a different perspective. The dwindling commodity prices of the past two years have been a welcome reprieve for most of the people in this world.
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