The economy is generally in a deflationary mode, meaning prices for some commodities are falling--the May consumer price index fell 0.2% But a new report from the UN says global food prices will rise due to an increasing standard of living in the developing world. That means more meat and meat products will be consumed, and meat costs much more to produce. The report says prices rises will be seen next year when animal-related products will increase 10-20%. It is not at all comforting to know that in 1991 Goldman Sachs inaugurated its Commodity Index Fund, which includes the price of cattle, coffee, cocoa, hogs and wheat. Other investment banks soon followed Goldman's successful new investment business. Speculative calls on the grain exchanges helped drive the spot price of wheat to historic highs in 2008 where it hit $11/bushel. The worldwide price of food rose 80% from 2005 to 2008. Forty-nine million Americans could not afford full meals*.
*Kaufman, Harper's Magazine 7.10