The RBA yesterday afternoon released its commodity price index for June, which registered another 2.9% fall in Aussie dollar terms – the fifth consecutive month of decline – and 1.7% fall in SDR terms – the sixth consecutive month of falls:
Preliminary estimates for June indicate that the index declined by 1.8 per cent (on a monthly average basis) in SDR terms, after declining by 1.8 per cent in May (revised). The largest contributor to the fall in June was the decline in the price of iron ore. The base metals subindex rose in the month while the rural commodities subindex declined. In Australian dollar terms, the index declined by 2.8 per cent in June.
Over the past year, the index has declined by 9.6 per cent in SDR terms, largely driven by declines in the prices of bulk commodities. The index has declined by 7.3 per cent in Australian dollar terms over the past year.
A chart showing the index in both AUD and SDR terms is shown below:
And the six month moving average trend in prices is presented below. As you can see, commodity prices have been falling for an extended period:
The SDR series is generally a pretty good guide to the terms of trade, suggesting that it will continue to come under pressure as the year progresses.
Note: iron ore accounts for 32.7% of the index, and obviously has been the driver of much of the recent falls.
