Data suggests commodity prices have a relatively high positive correlation to the Personal Consumption Expenditures (PCE) price index.
by Dr. Mark Shore
Institutional Investor
As commodity prices fluctuate in response to supply and demand, and inflation continues to rise, a key question arises: How closely do commodity prices track inflation indicators?
[…] Since the financial crisis, core inflation remained stable around the PCE’s 2% target until April 2021 when inflation surged globally due to pandemic-related supply chain disruptions and changing consumption patterns. By summer and fall 2022, inflation peaked between 5.6% and 9.1%, depending on the index. Inflation began to decline, reaching a temporary low in late 2024.
[…] The Bloomberg Commodity Index (BCOM) hit its lowest point in March and April 2020, rebounded to pre-pandemic levels by January 2021 and peaked in June 2022. BCOM then declined by about 32%, hitting a recent low in September 2024, returning to August 2021 levels.