John Block Reports from Washington

Hello, everybody out there in farm country. This radio commentary is brought to you by the
National Corn Growers Association, CropLife America, and Renewable Fuels Association.
They are all friends, supporters, and allies of a healthy farm economy and prosperous rural
America. Thank you.

And now today’s commentary-

Let me open by reading a statement from Rep. Glenn Thompson (R-PA). “Without a robust rural
America, people in the city are going to wake up hungry, and the more I learn about cotton,
they’re going to wake up naked too.” I like that quote. We don’t want the consuming public to
forget the essential value of the farmers, ranchers, and whole ag industry.

My subject today will be inflation. We have talked so much about how bad it is, but maybe we can find some hope. According to a global economist at JP Morgan, weaker global demand in the face of diminished purchasing power is helping to lift our foot off the inflation accelerator. Global commodity prices are starting to come down after rising by 9.7% in the second quarter. Global inflation should be down to 5% in the last half of this year. Hope they are right. We have watched our gasoline prices fall. Crude oil was $120 per bushel in June and now it’s around $93. Food prices fell 1.9% in August. That was the fifth straight monthly decline. Imports of manufactured goods are not going up like they were.

On the other hand, service costs keep going up. It is the labor shortage. And I don’t see it coming
down soon. Look at our imports. Excluding autos, import prices fell .5% between April and July.
I read an article in the Wall Street Journal which argues that China is helping to ease the price
pressure. The world’s second largest economy grew just .4% from a year ago. They have reduced
their investment. Their iron-ore prices are down almost 40%. China has chosen to lock down
their companies because of Covid-19. China, with excessive supply and weak demand, is not
going to drive inflation. The cost of transporting produce both on land and on sea is not as
expensive as it was. Supply chain disruptions are not what they were.

There is one big question that could slam the door on the progress we have seen. Expanded war
between Ukraine and Russia could spill over into some other countries. If Russia shuts off all oil
and gas to Europe, who knows the outcome. The world economy is on a rough ride. It looks like
the U.S. is doing better than most.

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www.johnblockreports.com.