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Commodity Price Index
Definition: This indicator measures the rate of inflation for commodities such as precious metals (gold, silver, copper, aluminium), rice, sugar, wheat and wool.
Additional Info: For countries that rely on exports, a rising trend can have a positive effect on the domestic currency. As commodity prices rise, foreign buyers must change a greater amount of their own currency to pay for goods. Thus increasing demand for the export nation’s currency. An example of an exporting nation is Australia. Some 20% of domestic income is derived from export earnings. It is the case that the Australian Dollar (AUD) is closely correlated with the price of gold because the precious metal is one of their main exports. Export inflation can have a positive effect on trade balance. Related Terms: Trade Balance - ANZ Commodity Price Index - Export Price Index
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