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Commodity price movements and PCE inflation

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  • Bart Hobijn

Abstract

With the recent run-up in crop and energy prices - and the subsequent sharp reversal of these trends - the effects of commodity price movements on U.S. inflation merit renewed attention. A study of the contributions of grain and oil prices to the PCE index of inflation suggests that the effects are more modest than one might expect. Moreover, commodity price increases affect relatively few goods prices: Higher crop prices translate narrowly into price hikes for food, tobacco, and gardening supplies; rising oil prices mainly influence fuel, energy, and transportation prices.

Suggested Citation

  • Bart Hobijn, 2008. "Commodity price movements and PCE inflation," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 14(Nov).
    • Handle: RePEc:fip:fednci:y:2008:i:nov:n:v.14no.8
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    Cited by:

    1. Salas, Jorge, 2009. "¿Qué explica las fluctuaciones de la inflación en el Perú en el periodo 2002-2008? Evidencia de un análisis VAR estructural," Revista Estudios Económicos, Banco Central de Reserva del Perú, issue 16, pages 9-36.
    2. James Davidson & Andreea Halunga & Tim Lloyd & Steve McCorriston & Wyn Morgan, 2016. "World Commodity Prices and Domestic Retail Food Price Inflation: Some Insights from the UK," Journal of Agricultural Economics, Wiley Blackwell, vol. 67(3), pages 566-583, September.
    3. Alisson Curátola de Melo, 2013. "Brazil’s Commodity Price Index," IFC Bulletins chapters, in: Bank for International Settlements (ed.), Proceedings of the Sixth IFC Conference on "Statistical issues and activities in a changing environment", Basel, 28-29 August 2012., volume 36, pages 217-227, Bank for International Settlements.
    4. Bart Hobijn, 2020. "The Supply-Side Origins of U.S. Inflation," Central Banking, Analysis, and Economic Policies Book Series, in: Gonzalo Castex & Jordi Galí & Diego Saravia (ed.),Changing Inflation Dynamics,Evolving Monetary Policy, edition 1, volume 27, chapter 7, pages 227-268, Central Bank of Chile.
    5. Guglielmo Caporale & Luca Onorante & Paolo Paesani, 2012. "Inflation and inflation uncertainty in the euro area," Empirical Economics, Springer, vol. 43(2), pages 597-615, October.
    6. John C. Williams, 2011. "Will the financial crisis have a lasting effect on unemployment?," Speech 83, Federal Reserve Bank of San Francisco.

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