Yesterday evening, the RBA released its commodity price index for January, which registered a 1.1% fall in Aussie dollar terms and a 0.9% decline in SDR (currency weighted) terms:
Preliminary estimates for January indicate that the index declined by 0.9 per cent (on a monthly average basis) in SDR terms, after falling by 3.4 per cent in December (revised). The largest contributor to the decline in January was the price of oil. The base metals and rural commodities subindices also declined during the month. In Australian dollar terms, the index declined by 1.2 per cent in January.
Over the past year, the index has fallen by 20.4 per cent in SDR terms, largely driven by falls in the prices of bulk commodities. The index has fallen by 19.1 per cent in Australian dollar terms over the past year.
Over the three months to January, the index of commodity prices declined by 1.2% in Australian dollar terms and by 5.3% in SDR terms. Over the year, they were down by 19.0% (AUD terms) and 20.5% (SDR terms) respectively.
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, with no turnaround in sight:
The release last week of the import/export price indices for the December quarter suggested that Australia’s terms-of-trade would fall by a further 0.9% when the national accounts are released in early March, as heavy falls in iron ore were partly offset by lower oil (petrol) prices.
So, the national income shock rolls on, but with some reprieve from lower oil prices.
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