Global commodity price growth accelerates to a six-month high in December

Global commodity prices rose 9.2% over the previous month in December, which was notably stronger than November’s 4.2% uptick and marked the strongest increase since June.

December’s upturn was chiefly driven by higher prices for base metals and energy. Despite the ongoing rise in Covid-19 cases globally, positive news surrounding U.S. stimulus measures and strong manufacturing activity boosted market sentiment and supported demand prospects for base metals and energy commodities, thus pushing prices higher. Moreover, the beginning of the Covid-19 vaccine rollout in December should have added further upward price pressure. Meanwhile, agriculture prices benefited from upbeat demand, while precious metal prices increased marginally as the recent spike in new Covid-19 cases supported safe-haven demand somewhat  .

FocusEconomics panelists expect global commodity prices to rise 10.6% year-on-year in Q4 2021 (previous edition: +11.3% year-on-year). A strong rebound in energy prices is set to spearhead the increase, due to stronger global demand for oil as the impact of Covid-19 fades and global economic activity recovers. Moreover, higher inflationary pressures and ultra-low interest rates should support precious metal prices. Meanwhile, base metal prices are seen increasing slightly following their recent rally, as strong fiscal stimulus stokes demand. In 2022, global commodity price growth should soften as energy prices stabilize and safe-haven demand weakens. Our panelists forecast a 3.4% year-on-year increase in prices in Q4 2022.



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