Reserve Bank of Australia Index of Commodity Prices

Commodities (rural and non-rural) account for a significant proportion of Australia’s exports. Even though tourism and manufactured exports have grown strongly in recent years, earnings from commodities were around two thirds of total export earnings from goods and services in 1991/92. This was despite the cyclically low level of prices. Furthermore, the volatility of commodity prices is an important source of fluctuations in export income and therefore in domestic income and activity. Many commodity price indices are published. Some, such as The Economist Index, include several commodities which are not produced in Australia. The Reserve Bank Index of Commodity Prices is a more relevant index for Australia, providing a timely indicator of the prices received by Australian commodity exporters. It is based on the prices of 17 major commodities exported by Australia, accounting for around seventy five per cent of total commodity exports. The Index, including its rural and non-rural components, is published monthly in terms of US dollars, Australian dollars and Special Drawing Rights (SDRs). Some changes to the Index are being made to make it more relevant and to update the base period to 1989/90, in line with recent revisions to statistics published by the ABS. This article reports on those changes; it also addresses some questions which are frequently raised by users. A technical description of the Index appears in the Attachment.