Commodity Prices As a Leading Indicator of Inflation

International Monetary Fund

No 1988/087, IMF Working Papers from International Monetary Fund

Abstract: Commodity prices may be a leading indicator of inflation, because of the relative importance of flexible auction markets for the determination of these prices. Empirical tests using data for the large industrial countries as a group suggest that changes in commodity prices tend to lead those in consumer prices, and that the inclusion of commodity prices significantly improves the fit of regressions of a multi-country consumer price index. However, there does not appear to be a reliable long-run relationship between the level of commodity prices and the level of consumer prices.

Keywords: WP; commodity price; exchange rate; excess demand; supply condition; trade commodity contract; commodity-price cycle; commodity price behavior; equilibrium price; aggregate CPI; consumer prices; price movement; Commodity prices; Inflation; Consumer prices; Commodity price indexes; Consumer price indexes; Global (search for similar items in EconPapers)
Pages: 46
Date: 1988-01-01
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Citations: View citations in EconPapers (2)

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