Profit Confidential Expert Reports: Devaluation of U.S. Dollar a Driving Factor Behind Inflation in Food Prices

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In a recent Profit Confidential article, lead contributor and financial expert Michael Lombardi reports that recent data show that the prices of commodities like corn and wheat in U.S. dollars have increased 18.5% and 39.5%, respectively, since the beginning of 2012; however, when measured in gold bullion, corn prices only rose 7.3% so far this year, and wheat prices have increased by 24.3%. (Source: StockCharts, last accessed October 25, 2012.) Lombardi reasons that the weakening U.S. dollar is partly to blame for the major rise in food prices.

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Profit Confidential Expert Reports: Devaluation of U.S. Dollar a Driving Factor Behind Inflation in Food Prices

Food in the U.S. economy is now more expensive than ever before.

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In a recent Profit Confidential article, lead contributor and financial expert Michael Lombardi reports that recent data show that the prices of commodities like corn and wheat in U.S. dollars have increased 18.5% and 39.5%, respectively, since the beginning of 2012; however, when measured in gold bullion, corn prices only rose 7.3% so far this year, and wheat prices have increased by 24.3%. (Source: StockCharts, last accessed October 25, 2012.) Lombardi reasons that the weakening U.S. dollar is partly to blame for the major rise in food prices.

“Food in the U.S. economy is now more expensive than ever before,” states Lombardi, “…[and] the greenback has been declining in value against other world currencies (except the euro) for four years now, making prices of commodities more expensive.”

Lombardi notes that in 2011, consumer spending on food, as a percentage of income, increased 5.4% from 2010. (Source: Bureau of Labor Statistics, September 25, 2012.) He says that this means an even bigger portion of consumer income will go toward consumer spending on food this year as food prices continue to increase significantly.

“Rising food prices have been blamed on the drought in the U.S. Midwest and a dry summer in Russia, the Ukraine, and Kazakhstan (source: The World Bank, August 30, 2012),” states Lombardi. “In the second quarter of this fiscal year, corn production declined by $12.0 billion in the U.S. economy and farm inventories fell significantly (source: The Washington Post, September 27, 2012).”

In the article “Food Prices Through the Roof; But Government Says No Inflation,” Lombardi points out that if food prices increase, consumer spending declines, because consumers will have to spend more on food, shifting their spending over from other goods to food.

Lombardi concludes by reiterating his point: “…rising food prices are going to take a toll on consumer spending. The Federal Reserve’s quantitative easing may have protected banks, but it may actually be killing consumer spending by devaluing the U.S. dollar as inflation is created.”

Profit Confidential, which has been published for over a decade now, has been widely recognized as predicting five major economic events over the past 10 years. In 2002, Profit Confidential started advising its readers to buy gold-related investments when gold traded under $300 an ounce. In 2006, it “begged” its readers to get out of the housing market...before it plunged.

Profit Confidential was among the first (back in late 2006) to predict that the U.S. economy would be in a recession by late 2007. The daily e-letter correctly predicted the crash in the stock market of 2008 and early 2009. And Profit Confidential turned bullish on stocks in March of 2009 and rode the bear market rally from a Dow Jones Industrial Average of 6,440 on March 9, 2009, to 12,876 on May 2, 2011, a gain of 99%.

To see the full article and to learn more about Profit Confidential, visit http://www.profitconfidential.com.

Profit Confidential is Lombardi Publishing Corporation’s free daily investment e-letter. Written by financial gurus with over 100 years of combined investing experience, Profit Confidential analyzes and comments on the actions of the stock market, precious metals, interest rates, real estate, and the economy. Lombardi Publishing Corporation, founded in 1986, now with over one million customers in 141 countries, is one of the largest consumer information publishers in the world. For more on Lombardi, and to get the popular Profit Confidential e-letter sent to you daily, visit http://www.profitconfidential.com.

Michael Lombardi, MBA, the lead Profit Confidential editorial contributor, has just released his most recent update of Critical Warning Number Six, a breakthrough video with Lombardi’s current predictions for the U.S. economy, stock market, U.S. dollar, euro, interest rates and inflation. To see the video, visit http://www.profitconfidential.com/critical-warning-number-six.

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