Food prices fall over the summer

Prices for wheat, corn and other commodities that form the basis of much of the world’s food supply fell sharply this summer.

This is a welcome signal for consumers dealing with high grocery bills and for investors hoping inflation will take a toll on the economy as a whole. Wheat prices have fallen about 40% since the spring, and corn prices have fallen about 25%.

Tom Martin, Senior Portfolio Manager at Globalt Investments, said: “Inflationary pressures will subside as we slow down and the economy appears to be slowing in general.”

Soaring food and energy prices have led to the highest inflation in 40 years this year. Steady demand combined with constrained supply set inflation on an upward trajectory. The situation worsened when Russia invaded Ukraine in February, hampering the production and export of wheat and other crops, as well as the production of oil and natural gas.

Currently, prices are falling as demand and supply begin to balance out in a global economic slowdown. Ukraine and Russia reached agreement on grain exports, helping to further ease global supply shortages. Ukraine exports about 10% of the world’s wheat and maize.

The U.S. Department of Agriculture predicts increased wheat production this year and the potential for a record soybean harvest.

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