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The European financial crisis and slowing growth in China, India and the United States have pushed down the prices of a wide array of commodities in recent weeks.
If the trend continues, businesses and consumers are likely to reap the benefits through cheaper prices for goods like cotton shirts and copper wiring, coffee beans and gasoline. While that would bring a bit of relief to strained budgets, economists say that the commodities plunge largely reflects the growing weakness in the global economy.
Over the last month, global oil prices have declined by about 12 percent, while corn, copper, lead, cocoa and coffee have all dropped by more than 5 percent. Prices of corn, cocoa, oats, cotton, rubber, coffee, aluminum, silver, zinc and nickel are all more than 20 percent lower than a year ago.
Gasoline prices are falling precipitously, by nearly 20 cents over the last month alone, to a national average of $3.54 a gallon on Wednesday — nearly 45 cents below the high for the year in early April.
“The world economy is in risk of a recession and on that possibility, commodity prices weaken,” said Allen L. Sinai, chief global economist for Decision Economics, a consulting firm. “It is very helpful to consumers because food, gasoline, heating oil and clothing should get cheaper, but if a weaker economy costs the consumer his or her job they don’t have income to buy a shirt.”
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