Photo: Expansion Magazine
By Isaac Cohen*
With the emergence of concerns about inflation, commodity prices are one indicator that should be watched closely, to find out if there is a sustained trend toward higher prices, or if price increases are caused by transitory factors. In the past year, some commodity prices have increased in some cases vigorously, regaining the loses caused by the pandemic.
For instance, at the London Metal Exchange three-month copper futures, the bellwether of metals, reached $10,417 a metric ton, more than the previous peak of $10,160 of February 2011. Several factors account for this increase, such as the reactivation of the US economy and the expectation of approval of an infrastructure spending package, together with gradual overcoming of bottlenecks in production and shipping caused by the pandemic. However, this time increased demand has not yet come from China, which consumes around half of world copper production.
By contrast, iron-ore prices have surged to $233.10 per metric ton, mainly on account of increased demand from China’s construction sector. Also, after falling last year to around $40, the price of oil has remained above $60 per barrel, close to the average of the last two decades. Finally, gold prices, considered a refuge against inflationary pressures, have fallen around one percent throughout this year
Therefore, thus far it cannot be concluded that there is sustained trend of commodity price increases.
*International analyst and consultant, former Director ECLAC Washington. Commentator on economic and financial issues for CNN en Español TV and radio, UNIVISION, TELEMUNDO and other media.
