Commodity prices (prices for basic materials, prices for raw materials)

The amount of money to be paid on the market for internationally traded basic materials (raw materials). In their changes, commodity prices affect the prices of intermediate inputs. However, because these account for around thirty percent of the producer price index in the euro area and sooner or later pass through to the HICP, they are closely monitored by the central bank. – In the manufacturing industry as a whole, attempts are being made to absorb increases in raw material prices as far as possible. This is done primarily by means such as – reducing production costs, – using substitutes, – changing formulations or – making savings in the administrative area. – Brand owners have built up strong, price-inelastic brands, usually by investing heavily in advertising and sales promotion. Here, a price increase of one percent leads to a drop in demand of far less than one percent. In the past, the price-setting power thus acquired allowed the respective companies to immediately offset higher prices, especially for agricultural raw materials, with higher end-product prices; often enough even over-compensating: they raised the prices more than to offset the higher costs associated with the raise of raw material prices. – See agricultural policy, biofuels, cost-push inflation, oil-food nexus, oil price, financialization, inflation, global, climate inflation, carbon dioxide inflation, economic diagnosis, protein inflation, commodity bubble, two-pillar principle, second-round effects. – See the annex “Euro area statistics,” section “Prices, output, demand and labor markets” in the respective ECB Monthly Bulletin (broken down with and without energy prices), ECB Monthly Bulletin of March 2004, pp. 47 ff (importance of commodity prices for monetary policy), ECB Monthly Bulletin of January 2008, p. 91 (demand from emerging market economies pushes up commodity prices and affects HICP), ECB Monthly Bulletin of September 2008, p. 21 (Fluctuations in commodity prices depending on speculators: overview), ECB Monthly Bulletin of October 2008, p. 37 et seq. (Trends in commodity prices; overviews), ECB Monthly Bulletin of December 2008, p. 15 et seq. (Indices reported by the ECB; overviews), ECB Monthly Bulletin of March 2009, p. 17 et seq. (Striking downward movement in 2008; overview), ECB Annual Report 2008, p. 65 et seq. (developments during the financial crisis; overviews), ECB Monthly Report of March 2010, pp. 16 f. (oil market 2000-2009; overviews), ECB Annual Report 2010, pp. 60 f. (commodity prices and HICP; sectoral impact breakdown; many overviews; references), ECB Monthly Report of January 2011, pp. 13 ff. (market condition and outlook; prices since 2006; references), ECB Monthly Report of October 2011, pp. 52 ff. (basic and current information on contagion effects; overviews), ECB Annual Report 2011, p. 53 ff. (transmission effects to other sectors of the economy; overviews), ECB Monthly Report of October 2013, p. 59 ff. (very detailed account; many overviews; references), ECB Monthly Report of July 2014, p. 15 ff. (commodity prices since 1999; impact on inflation; overviews; references).

Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent!
University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
E-mail address: info@ekrah.com
https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk
https://www.jung-stilling-gesellschaft.de/merk/
https://www.gerhardmerk.de/