From farmprogress.com:
The status of the general U.S. economy plays an important role in the outlook for the agricultural industry. Trends in economic growth and consumer demand influence commodity prices. Interest rates, inflation, and labor markets impact production costs. Agricultural producers face a great deal of uncertainty in any economic environment.
For a while, inflation has been the dominant economic topic. At the close of 2023, there was some indication of easing inflation. Expectations were centered around a Consumer Price Index (CPI) that had leveled to around 3% annually, compared to a high of 9% in mid-2022. When inflation started heating up in 2021, we heard much about rising prices being “transitory,” referring to temporary price changes due to disturbances such as supply shortages. On the other hand, actual inflation refers to a devaluation of currency. Both affect prices, making it difficult to distinguish between the two.
One way to get a handle on the difference is to look at variations of CPI. Core CPI, for example, removes the effects of highly variable food and energy prices. Core CPI in late 2023 was estimated to have settled to a pace of about 4% annually. CPI for services was still running about 5%, reflecting continued shortages in labor markets and wage pressure. While still historically high, housing prices have also steadily declined throughout 2023. The good news is that by most measures, the pace of increasing prices in the general economy is slowing and approaching the 2% Federal Reserve target. The downside is some of those same slowing measures can indicate a pending recession.