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Commodity prices and inflation

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  • Frederick T. Furlong
  • Robert Ingenito

Abstract

This study examines the empirical relationship between changes in commodity prices and inflation by looking at the performance of non-oil commodity prices as stand-alone indicators of inflation and in conjunction with other leading indicators of inflation. The results indicate that the empirical link between commodity prices and inflation has changed dramatically over time. Commodity prices were relatively strong and statistically robust leading indicators of overall inflation during the 1970s and early 1980s, but they have been poor stand-alone indicators of inflation since the early 1980s. When considered in conjunction with other likely indicators of inflation, non-oil commodity prices have had a somewhat more statistically robust relationship with inflation in recent years, though the added information content in commodity prices regarding inflation is limited.

Suggested Citation

  • Frederick T. Furlong & Robert Ingenito, 1996. "Commodity prices and inflation," Economic Review, Federal Reserve Bank of San Francisco, pages 27-47.
    • Handle: RePEc:fip:fedfer:y:1996:p:27-47:n:2
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    References listed on IDEAS

    as
    1. S. Brock Blomberg & Ethan S. Harris, 1995. "The commodity-consumer price connection: fact or fable?," Economic Policy Review, Federal Reserve Bank of New York, vol. 1(Oct), pages 21-38.
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    Keywords

    Prices; Inflation (Finance);

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