Commodities priced in dollars and inflation?

"With commodities fromm oil to natural gas to grain to meat priced in dollars and becoming more expensive as the greenback falls, consumers have to take more out of their wallets to simply buy the same amount of goods."

Why are these commodities becoming more expensive as the dollar falls if they are priced in dollars? (assuming their price stays constant). In other words – how does a falling dollar make them more expensive?

Am I interpreting that quote correctly? (The theme of the article is that a dollar slide leads to a rise in prices… from an import stantpoint, I agree. But the sentence above seems like he is getting at something slightly different).


3 Responses to “Commodities priced in dollars and inflation?”

  1. yeeooow Says:

    if i sell you oil for dollars and then the dollar drops, I need more of those dollars to buy the same number of other things in Europe. So I raise the price of oil to get more dollars… it’s a cycle

    Also, commodity prices rise for other reasons as well. we are experiencing droughts so wheat is more expensive. more people are growing corn for energy and so less land is available for other crops.

    with china and india growing so fast, the base metals have been rising (supply and demand)

    ultimately, rising prices of commodities are the result of inflation not the cause. Inflation is usually considered a function of the increase of cash and credit.

  2. kri55h Says:

    it’s not that they are becoming more expensive…well they are….but not in the way you might think. it’s the dollar that is losing it’s value. the commodities cost the same no matter what. so because the dollar value is diluted, it now takes more of them to buy the same amount of product, ie gold, oil, goods, etc.
    the fall of the dollar does indeed lead to higher prices, but it’s more abstract. i like to imagine sort of like a physics problem. the prices are at a fixed point sort of, but we the consumer with our dollars are moving farther from them value wise, so it gives the illusion of increasing prices. if you could stand outside the situation in a relativistic sense, and look, you would see that it’s not the prices that are rising, it’s that the dollars fall causes it to be less effective to get the same amount of output (or goods) from it. goods require a certain amount of "energy" regardless of the amount of currency required to produce them or buy them. when the dollar deflates, it’s losing that energy, so it takes more of them to purchase the desired product or service. things seem to cost more.

  3. StephenWeinstein Says:

    You allude to the answer with the phrase "assuming their price stays constant".

    Their price in U.S. dollars does not stay constant.

    Oil is imported from the middle east. Natural gas, meat, and oats are imported from Canada.

    Their prices may rise in U.S. dollars while being constant in the currency of their countries of origin.

    Grain prices are also heavily dependent on diesel fuel prices (due to transportation costs), which go up when oil prices are up.