More than half of all commodities have fallen since inflation has risen

It was January 2022 when the increase in the cost of living began to resonate more and more in different parts of the world. A hype that was building, month by month, until closing the year with average global inflation of around 8%. Since that first month last year through today, the average global CPI data has fallen slightly to 6.1%, according to Bloomberg, with few assets able to handle it.

The price of raw materials, closely linked to this metric, has been particularly hurt, with the Bloomberg Commodities Index putting up 7% on the year and only 11 of them, among the majors, with more global revaluations. Inflation rate (6.1%) since January last year. Estimates of a slowdown in economic activity and the specter of recession that haunts many countries push down the prices of some resources, such as energy, for fear of lower demand. In this sense, it is fuel that weighs particularly heavily on the group – it is a third of the weight of the Bloomberg Commodities Index -, as natural gas has lost more than 27% since last year and more than 40% in 2023 alone, making it the most bearish in this cycle.

Gas fall is particularly responsive to Winter is warmer than expected At first, with the rise in stocks in Europe thanks to the fact that the eurozone countries prepared for the worst after the conflict between Russia and Ukraine due to the sanctions imposed on the former, which prevented them from going to it in search of fuel. Thus, at the beginning of 2023, the price of natural gas slightly exceeded 70 / MWh, a value far from the maximum reached in August last year, when it exceeded 350 / MWh.

And it is that with regard to the role of commodities as a shield against rising prices, they from XTB point out: “Raw materials tend to go up when there is a price hike, but they don’t necessarily protect us from inflation. It may be that during the initial phase we can benefit from it, but High inflation also brings with it monetary tightening and economic inflation that leads to lower demand and thus lower prices.As with some components used in infrastructure related to renewable energy or in artificial intelligence devices, the only raw material that is considered a store of value in periods of high inflation is gold, which is one of The asset that investors turn to from periods of volatility.”

At the other end of the table are raw materials that are not only benefiting from the year but are trading at all-time highs. Weather disturbances and severe drought that have plagued the global scene for months, which directly affect crops, turn into the price of what is known as soft materials (which include agricultural products), which occupy the first positions in the table.

Brent crude managed to hold on thanks to the war

This is how Diego Morin, IG analyst explains, noting that one of the aspects that must be taken into account “are the seasons of atmospheric changes to which the raw materials are exposed, and sometimes the adaptation of production, such as the problem of cocoa in the Gulf of Guinea. , where futures contracts reached their highest levels in Five years, making chocolate more expensive, while coffee prices are heading for annual lows given the change in production estimates,” he says.

The easing of the strict Covid-Zero policy in China, last October, and the reopening of the country in January this year, plays an important role in the rise in prices of agricultural resources, such as rice or orange juice, which has not ceased to become more expensive, because this country He is the main consumer. And so, since last January, Orange juice recorded a rise of more than 100% And more than 30% this year. Cocoa is next on the table, with a revaluation in its price also exceeding 30%. In this case, the reason comes from a strong production problem with crops in Ghana and partly in Ivory Coast – the main exporters – which has caused the cost of cocoa to rise by more than 25% since March.

For its part, Brent crude managed to remain positive in the first schedule (since January 2022) thanks to the strong recovery it witnessed in 2022 after the outbreak of the geopolitical conflict, when it reached extremes not seen since 2007. However, its price began to moderate due to Economic slowdown caused by restrictive economic policies Cut the price of crude oil by 6% this year.