Commodity price index takes a dive

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The RBA has released its commodity price index for August, which dived by 6.5% in SDR (currency weighted) terms – the key determinant of the terms-of-trade – and by 4.2% in Australian dollar terms:

Preliminary estimates for August indicate that the index decreased by 6.5 per cent (on a monthly average basis) in SDR terms, after increasing by 3.1 per cent in July (revised). The non-rural, rural and base metals subindices decreased in the month. In Australian dollar terms, the index decreased by 4.2 per cent in August.

Over the past year, the index has increased by 6.2 per cent in SDR terms, led by higher iron ore, gold and beef & veal prices. The index has increased by 13.1 per cent in Australian dollar terms.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.