Commodity Prices Are 192% Higher Than They Were In 1950: Here’s What’s Driving Growth

on June 11 2013 11:13 AM

In the 1700s, Thomas Malthus, a British cleric and scholar, was concerned that as the world’s population grew, food prices would skyrocket, resources would be severely extended, and disease and famine would strike. He theorized that it would be this overextending of resources and resultant famines that would keep the world population in check.

In 1968, biologist Paul Ehlrich reiterated the same sentiments in “The Population Bomb,” saying that rising population would create far too much demand, causing food prices to soar and famine to take hold. Economists of that time argued that rising prices would merely create an incentive to supply the demand, keeping prices in check over the long term.

Since 1950, the world’s population has multiplied 2.8 times. But in the same time period, world grain production has multiplied 3.6 times.

Looking at comparable numbers, over the very long run, food prices, for the most part, have fallen, according to a recent paper by David Jacks, an economist at Simon Fraser University, that looks at inflation-adjusted commodity prices over 160 years.

But in some ways Ehlrich and Malthus were correct. Even though food prices have fallen, soaring metal, mineral and energy costs have caused commodity prices, in the very long run, to rise significantly, according to Jacks’ paper. They have risen 192 percent since 1950, and by 252 percent since 1900.

Scroll down and check out this chart that shows the percent change in commodity prices since 1950. Hover over any bar to see which commodity it represents and by how much its price has increased since 1950:

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