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Wednesday, 9 September 2015

Commodities in context

Just following on from the previous post - and to put recent iron ore price gains in perspective - charted below is the Reserve Bank's commodities price index to August 2015.

Preliminary estimates showed that the index fell by 3.1 per cent in August (mainly due to oil and iron ore) in monthly average terms, after a horrible 3.6 per cent decline in July. 

Over the past year the index is 20.9 per cent lower in SDR terms, which is an ugly, ugly result.

As you can see the declines have been driven by the bulk commodities - iron ore, thermal coal and coking coal, denoted by the red line below.

The decline in the commodities index has been softened somewhat by the fall in the Aussie dollar, down by 7.4 per cent over the past year. 

The terms of trade continue to weigh heavy.