Commodities effect on inflation

Commodities tend to have a certain effect on inflation, some more then other. Here we explain which commodities are most important with regards to inflation.

Oil and inflation

The most important commodity to keep track on is oil. In fact, oil prices have the single most effect on inflation and consumer price index of all commodities.  Oils importance for consumer prices have decreased in many countries, while China and many other BRIC countries need/require more and more oil.

Gold and inflation

Gold are the commodity that plays the biggest role as an inflation hedge. When the US dollar loses in value against other currencies, the price of gold goes up. Investors tend to buy gold even more when the equity market are falling. The second most influential commodity as a inflation hedge is silver. However, gold is traded in way higher volumes than silver.

Want to know more about inflation?

-What is inflation?
-What drives inflation?
-Statements from central banks
-Guide to exchange rates and inflation