Today the Reserve Bank of Australia released the latest Index of Commodity Prices. Not too many graphs (apart from perhaps the terms of trade) reveal so simply why Australia is doing so well at an aggregate level (let's not forget not everyone benefits equally from commodity price rises!!)
Preliminary estimates for February indicate that the index rose by 2.2 per cent (on a monthly average basis) in SDR terms, after rising by 5.3 per cent in January (revised). The largest contributors to the rise in February were increases in the estimated prices of iron ore and coal, reflecting some further adjustment towards the higher contract prices in the March quarter. Increases in the prices of crude oil and wheat also contributed to the rise, while beef & veal prices fell. In Australian dollar terms, the index rose by 1.9 per cent in February.
Over the past year, the index has risen by 48 per cent in SDR terms. Much of this rise has been due to increases in iron ore, coking coal and thermal coal export prices. With the appreciation of the exchange rate over the year, the index rose by 32 per cent in Australian dollar terms.
As indicated in previous releases, preliminary estimates for iron ore, coking coal and thermal coal export prices are being used for recent months, based on market information.
For further details regarding the construction of the index, please refer to ‘Updating the RBA's Index of Commodity Prices’ in the October 2009 issue of the Bulletin.