Commodities Impact Worldwide Inflation

A sharp surge in natural gas prices since August has put pressure on a set of commodities, including crude oil, coal and electricity. Prices are currently squeezing margins for industrial users.

Some industrial activities have contributed to higher prices for other commodities, such as base metals and ammonia as output is purposefully reduced to save natural gas.

Given existing supply bottlenecks in shipping and computer chips, the commodity price spikes have fed renewed concerns about inflation and a potential negative growth impulse. The International Monetary Fund in October trimmed its forecast for global growth, highlighting several risks that include rising fuel costs and accelerating inflation.

Energy prices’ volatility could persist in the coming months. Gas market sparks next leg up across commodities as some factors have left global natural gas inventories on the low end as winter pushes prices higher.

Cold temperatures in Europe and Russia lasting through spring this year limited the typical seasonal buildup of gas inventories.