Saturday, 04 April 2015 10:31

Fall in Commodity Prices May Support Growth Rate

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Commodity prices were on their high after the economic crisis. During the previous year commodity prices fell especially on strengthening U.S. economy.

Low commodity prices mean low inflation in the economy that increases purchasing power of consumers. If the money value increases a consumer may spend more amount as now he is getting more than what he was getting previously. Ultimately high spending supports growth of the economy.

Let see commodity prices at U.S. market during last quarter of 2013. GSCI Index of Energy commodities gained by0.57% while the same index for Agricultural commodities fell by 6.11%. For industrial metals the index fell by 2.60%.

Among all other commodities crude oil is the most important one. Moderate change in oil prices during last quarter might have added value to dollar. Fall in oil price reduces production cost that ultimately makes product prices affordable. Overall commodity prices have remained low by 0.60% that may support consumer spending.

We may see U.S. GDP near to 3.3% and spending near to 0.8%. It may not strongly support dollar in near time but in long run if spending increases we may see better growth rate and strong USD.


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