RBA Index of Commodity prices shows value of dollar weakness

Late yesterday the RBA released its monthly Index of Commodity Prices:

Preliminary estimates for September indicate that the index fell by 1.3 per cent (on a monthly average basis) in SDR terms, after falling by 2.8 per cent in August (revised). The largest contributors to the fall in September were declines in the prices of iron ore, coal and oil, which were partly offset by increases in the prices of gold and aluminium. The prices of rural commodities also declined. In Australian dollar terms, the index rose by 0.9 per cent in September.

Over the past year, the index has fallen by 14.9 per cent in SDR terms. Much of this fall has been due to declines in the prices of iron ore and coking coal. The index has fallen by 18.5 per cent in Australian dollar terms over the past year.

As indicated in previous releases, preliminary estimates for iron ore, coking coal and thermal coal export prices are being used for recent months, based on market information.

So, another big fall in the month for commodity prices. Except it wasn’t was it? Because over September, the Australian dollar fell more still. Here is the same chart in Australian dollars:

Not pretty, but in September commodity prices rose (one can only assume that this index is measured around mid month given the AUD rose after that).

The looming crisis for Australian economic growth, gestured at in yesterday’s RBA rate cut and statement, is of our own making. Our elites have talked up and aimed policy at a strong dollar for too long. Now we will pay with a radically curtailed mining investment boom.