Crude oil prices are zipping north. But that is hardly the only commodity on fire. Copper prices hit a high of $9,361 per tonne on the last day of 2010 on the London Metal Exchange before retreating a bit.
Nickel and tin, too, appreciated sharply in the last year. As an industrial recovery, however sclerotic, begins, these prices are likely to shoot up further in 2011. In case of copper, for example, higher prices are likely in 2011 as inventories of the metal came down by a third in 2010 from those in 2009.
The problem is likely to be more acute for countries such as India that import large amounts of these commodities. One area where the effect is likely to be felt is non-food manufactured goods inflation, which has begun to rise again of late. These trends, when seen against India’s continued strong growth, may give more headaches to policymakers.