In the chart below we have calculated the cumulative daily price change of the major food and energy commodities in the CRB index (Corn, Soy, Wheat, Cattle, Hogs, Oil and Natural Gas) since the beginning of 2008. We then multiplied the changes by the annual per capita consumption of each item. While this method may oversimplify the actual costs, it provides a good idea of how changes in commodity prices have impacted consumers' wallets over the last 14 months. In July, when the price of oil and other key commodities were trading at record highs, the impact of rising prices was translating into an extra $4.77 per American per day versus the start of 2008.
With the crash in the commodity sector over the last six months, however, the tax of higher commodity prices has been more than completely erased. In fact, compared to prices at the start of 2008, consumers are now saving $4.99 per person per day, which is the lowest level across the entire period!
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While the government's massive spending bill signed yesterday promises to put an extra $13 in the weekly paycheck of most workers, the commodity rebate is saving every American nearly three times that amount ($4.99 x 7 = $34.93) per week. While the free market system has been getting a bad rap lately, this is just another case where the market's solution of lower prices in response to lower demand has provided a much better solution than the government alternative of a handout to those deemed "deserving" of one.