A surge in commodity prices usually precedes (and leads to) a surge in consumer price inflation.
You could argue that the rise in overall commodity prices is mostly oil. But other commodity prices are also going up (see lower chart), although that is partly because methane (natural gas) is used to make fertilisers.
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| Note logarithmic scale |
My "brekkie" index — an equally weighted index of corn (maize), wheat, oats, cocoa, coffee, sugar and orange juice — has been surging since Trump's Iran War.
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| N.B. Log scale |
If inflation remains stubbornly high because of higher oil prices and surging general commodity prices, Central Banks will, albeit reluctantly, raise interest rates and tighten credit. And that will pop the private credit and the AI bubble, driving the economy into deep recession.
Trump's legacy will long outlive him, just not in the way he thinks.
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