StatsGuru: Government gets an economic breather from commodity prices

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The Narendra Modi-led government can consider itself fortunate on one count, in ease of managing the macroeconomy: Commodity prices have started heading south. Table 1 shows how the prices of several major commodities have all declined over the past 12 months.

In fact, as Table 2 shows, in many cases the bulk of the reduction in commodity prices in the year-to-date period happened after the new government took over, on May 26. It is also worth noting that gold and silver have lost considerable value in the past two weeks, indicating a flight to other assets.

The general assumption is that the dollar moves inversely to commodity prices - when the former strengthens, the latter goes down, by and large. As Table 3 shows, since May 26 the dollar has seen a sharp decrease in value against major currencies.