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Two sides of inflation impacting ag economy

An economist suggests there are two sides to the inflation coin with implications for agriculture.

Robert Fox with CoBank tells Brownfield while costs for goods are coming down, inflation on services keeps creeping higher.

“Services is mostly in human capital and wages, so in order for services to start to come down in any noticeable way we’re going to have to see wage growth rates level off, right. And we haven’t seen any evidence of that.”

He says the stickiness of inflation will be an issue for farmers as interest rates climb higher than what the market is penciling in.

“And the reason being is we think the Fed is going to have to be a little more persistent with their rate levels.”

Fox expects one or two more interest rate hikes this year and says a key for farm income will be how long the Fed keeps rates elevated before easing off.

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