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Food Shocks versus Oil Shocks

Touch the Soil News #494 We are all familiar with oil-price shocks that send the cost of gasoline skyrocketing. When oil prices surge, economists create models of how everything we buy is impacted by the underlying cost of oil. Recently the Brookings Institute published an economic study on the effects of food price increases on the American economy. Authored by Jamien De Winne and Gert Peersman from Ghent University, the study found that a 5 percent jump in food commodity prices leads to higher inflation and slower economic growth equivalent to a 10 percent oil-price increase. Price increases in food have twice the negative impact on the economy as price…

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