The Commodity Rebate

In the chart below we calculated the 2008 price change of the major food and energy commodities in the CRB index (Corn, Soy, Wheat, Cattle, Hogs, Oil and Natural Gas) and multiplied the changes by the annual per capita consumption of each item.  While this method may oversimplify the actual costs, it provides a good idea of how changes in commodity prices have impacted consumers wallets this year.  Less than five months ago, the price of oil and other key commodities impacting the consumer were trading at record highs.  Because of these price increases, the average consumer was spending an additional $4.77 per day compared to the start of the year.

Five months later, we find ourselves in a situation where these key commodities have now declined by record amounts.  As a result, the cost of higher commodities has turned in to the windfall of lower commodities.  While consumers were spending an additional $4.77 per day in July, they are now getting a benefit of 4.02 per person per day.  On an annualized basis this works out to $1,460 per person.  While there are certainly plenty of headwinds out there, it's nice to see that at least some things are going in our favor.

 

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Comments

[Ric]

Not really. While the market reflects the downturn....real food prices have yet to adjust. The only items that have moved substatially are energies. Again food items will not downturn for another 2 months. So the consumer is actually saving about $2 a day until Feb. But by then it will be too late.

[Tom Chechatka]

Personally, I feel the wild fluctuations in basic commodities prices such as we have seen this year do more to create instability and feed uncertainty than rightfully should be tolerated.

[Ric]

I Agree. But the wild fluctuations are from hedgies and retirment funds moving at the speed of sound to different places to make money. Thus the average Joe was paying their interest at the pump and the grocery store for the last 8 mos and now he is tapped out. In a nutshell the " funds " created this recession...o at least made it this bad.