Food Inflation Is The Best Predictor Of Bond Yields | WHAT REALLY HAPPENED

Food Inflation Is The Best Predictor Of Bond Yields

Food Inflation And Asset Markets

Food inflation globally has been remarkably low in recent decades. Food prices compare very favorably to other inflation indicators such as the gold price. The US provides good, long term food inflation data back to 1913. While the spike in gold prices in the 1970s foreshadowed rising food inflation, so far rising gold prices seen since 2000 have not presaged an increase in food prices.

However, while food prices inflation has remained benign in the US, this is not true in China, where African Swine Flu has forced pork prices to 4 times US prices. This is starting to create upward pressure on grain prices globally. US corn prices and pork prices tend to follow each other with a lag.

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