Remember when you went to Mexico and it seemed like you could buy out the store for just a few bucks? Not any more! The value of the U.S. dollar has dropped against the peso and other currencies. It may sound as simple as saying your dollar doesn’t go as far in Mexico anymore... but inflation, a possible recession, and a weak dollar make up the most complicated aspect of rising food prices. Let’s take a look at why.

Around the World
American farmers are the most productive farmers in the world. As a result, we Americans have had the most affordable food in the world (around 10% of the average disposable income). Due to the weak dollar, other nations are now getting a “taste of the American good life.” How? Besides contributing to runaway gas prices, the weak dollar also means that U.S. wheat, beef, and corn are super cheap for other counties to buy. Plus, the huge and growing populations of people in India and China have more spending money than ever before. More money and cheaper food? No wonder we’re currently competing with these countries for food.

Wild Speculations
The bulls may not be running on Wall Street, but they're charging in the commodities pits. Investors see the rising cost of commodities, like corn and soybeans, and start to get nervous. They fear it is a sign that inflation is on the way. Ironically, those same commodities start looking pretty good to investors, who see them as holding value during inflationary periods. As investors buy, demand grows, and commodity prices go even higher. Commodities also look good to investors who want to diversify their portfolio when Wall Street looks unstable. It becomes a vicious trading cycle, which hurts food prices in the end.

Useful Links
Currency Converter
Foreign Agricultural Trade of the United States