Working Paper No. 48
By Andrew Logan and Lucy O'Carroll
A new commodity price index for the United Kingdom is constructed, based on purchases by the commercial and household sectors within the domestic economy. Contrasts are drawn with the alternative indices available. The discussion suggests that although commodity indices may have strong links to producer input prices, they may not be particularly informative about price movements further along the supply chain. This is because the importance of commodity prices diminishes as other factors, such as wages and margins, become more important. However, the Bank's new commodity price index does provide information which is of value in understanding and interpreting general inflationary pressures in the United Kingdom.
The Construction of the Bank's New UK Commodity Price Index