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Aug 25, 2008 6:57 pm US/Eastern
Consumer Watch: Commodity Prices Dropping
NEW YORK (CBS) ―
For several months cash-strapped consumers have been saddled with skyrocketing costs on everything from food to fuel, but now prices on a variety of commodities are starting to drop.
The price of gas has been falling for the last 37 days with the cost of a gallon of regular now sitting at about $3.70.
Back in June, the price of a 100 pound bag of flour more than doubled to $60. Bakers and pizzerias reluctantly raised prices. Since then, flour prices have dropped dramatically to $38 per 100 pound bag, resulting in some price breaks for consumers.
"My prices are down because the cost of flour is down," says Selwyn Robertson, who manages Montague Hot Bagels.
Robertson slashed bagel prices by a dime, and is hopeful he may get them back to the 75-cent a bagel of a year ago, making him the cheapest bagels in Brooklyn Heights.
"My sodas are down, my ice cream, my coffee is down. My chicken prices are down, my cutlet, my sandwiches," he says.
"It's pretty good compared to the other delis," lauds one customer.
And other prices are going south this summer as well. Corn is down 24 percent and soybeans down 17 percent in the last 2 months, but it won't translate to a smaller grocery bill anytime soon.
"No, we're not going to see everything fall," said Greg David, Crain's New York Business Editor.
David says although commodity prices have fallen from record levels, they're still markedly higher than historical levels.
"The real economic damage is coming from we're so much [higher] than we were a year ago," he says. "These are markets and there is speculation in the markets, momentum in the markets and momentum means that prices get ahead of the fundamentals and that's what happened here."
Experts say expect gas prices to keep falling even more in the coming months and the hope is that may translate to home heating oil prices falling too.
Another factor to take into account, experts say, is global demand for food products, which also has a tremendous impact on the prices we pay.
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