Commodity price shock

Well kiddo, have you ever had a toy that you really loved to play with, but then one day you couldn't find it? It could be because the toy became really popular and now everyone wants to have it, so the price went up really high. This is kind of like what happens with things that we use or eat every day like food, oil, and metals. When there is a lot of demand or not enough supply for these things, the price can go up really quickly, and that's called a commodity price shock.

Now imagine if the price of the food we eat every day, like bananas or bread, suddenly got really expensive. The stores would need to charge more for those items, and people might not be able to afford to buy them anymore. This is called inflation, and it's one of the things that can happen when there's a commodity price shock.

Commodity price shocks can happen for all sorts of reasons, like when there's a natural disaster that destroys crops or when there's a war in a country that produces a lot of oil. When this happens, it can have a big impact on the economy because businesses need to pay more for the things they need to make their products, and people need to spend more money on the things they need to live.

So, although commodity price shocks might seem like a small thing, they can actually have a big impact on our daily lives, and it's important to understand why they happen and how they can affect us.