Learning English - Words in the News
15 August, 2008 - Published 13:16 GMT
Commodities prices fall
Prices for important food and industrial raw materials are falling on world markets, partly in response to the sudden strength of the dollar. Oil is just over $110 a barrel, and gold has fallen below $800 an ounce. This report from Rodney Smith:
Raw materials, or commodities, have been hit hard by the effects of the stronger dollar. Most world commodities are priced in dollars, so when the dollar strengthens, commodity prices in other currencies rise, and people sell them.
The dollar's strength is based on a combination of factors; other economies may be slowing faster than the US, and American inflation is nearly 6%. That could trigger a rise in US interest rates, making the dollar even more attractive.
It's all part of a global upheaval in commodity prices which is reversing some of the gains of the last year or so. Brent crude oil in London is trading at $112 a barrel; gold has dropped to $787 an ounce (it peaked at just over $1,030 six months ago); silver is down 12%; and among foodstuffs, wheat and soya prices have fallen between two and 3 per cent.
Governments worried about inflation will be pleased. But the new downtrend in prices may not be enough to stop a round of higher wage demands among western economies in the months ahead, where workers have seen their earnings eroded by higher prices for food and manufactured goods. But some financial experts warn not to read too much into these price falls - this could simply be a correction, they say, and commodity prices could soon start to rise again.
Rodney Smith, BBC
a combination of factors
a global upheaval
downtrend in prices
a round of higher wage demands
seen their earnings eroded by higher prices for
to read too much into
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