RBA commodity price index posts 4th fall

Export commodity prices posted their fourth consecutive monthly fall in December.

The Reserve Bank of Australia's (RBA) index of commodity prices fell by 1.0 per cent (on a monthly average basis) in terms of special drawing rights (SDRs)*.

That followed a fall of 0.2 per cent in November, revised from a small increase, according to the preliminary estimates from the central bank.

The RBA said the price of gold exports headed downward, as did the export prices of coking coal and iron ore which are adjusting to lower spot and contract prices.

Despite the recent falls, the SDR measure of commodity prices was still up by 11 per cent from a year earlier.

In Australian dollar terms, the commodity price index was 2.5 per cent lower in December but up by 10 per cent over the year.

In early December, the RBA cut its monetary policy benchmark, the cash rate, to 4.25 per cent from 4.5 per cent.

When it announced the decision, the RBA said that while the terms of trade - the ratio of export prices to import prices - would remain relatively high, they had now peaked and would decline "somewhat" in the near term.

Although being up from 12 months before, the SDR index in December was at a nine-month low and six per cent below its all-time high in August.

* The value of the SDR is calculated by the International Monetary Fund on the basis of a weighted basket of four currencies - US dollar, euro, Japanese yen, and the British pound sterling.

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