Mitigating Commodity Deflation
While many consumers were cheering the drop in the price of oil this fall, the sentiment was mixed when it came to wholesaler-distributors.
Certainly, transportation costs may come down – particularly for distributors who rely on their own fleets for delivery. But for those who sell oil-based products like plastics and industrial lubricants, the value of inventory has also plummeted.
The trend is not limited to oil. The prices of most products on the commodities markets are falling as the world economy continues its downward spiral. Copper has lost more than 60 percent of its value since last summer; lumber has fallen to the lowest prices in 20 years. Corn and wheat saw similar spikes and falls in the past year.
The bubble has …
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