Timber has been found to be positively correlated with unanticipated inflation. During periods of high inflation, as in the 1970s, timber provided a partial inflation hedge. With a correlation of 0.34 to inflation during the 1970s, timber prices tended to outpace unexpectedly high inflation. In other words, during high inflation periods, timber price increases account for a larger proportion of returns than would otherwise be true.
During periods of low inflation, such as the one we have been experiencing since the early 1980s, timberland returns are generally also correlated with inflation. From 2003 through 2017, timberland and inflation had a correlation of 0.29.
Biological growth, which provides the majority of returns in all periods, accounts for a higher proportion of total return in a low inflation environment. However, because biological growth is a physical rather than an economic process, it is unrelated to inflation.