(November 30 – 09:50 ET) – The TD Commodity Price Index rose 2.9 per cent higher in November, more than reversing the 2.5-per-cent decline recorded in October. A renewed surge in crude oil and natural gas prices is behind the jump.

“The overall gain in the TDCI masked an underlying weakness in the other commodity groups, as mounting concern that slower world economic growth will sap demand for commodities continued to weigh on non-energy commodity prices in the month,” says Sheryl King, economist at TD Bank Financial Group. “However, we expect that world economic growth over the next two years will be close to 4 per cent, which should support commodity prices going forward.”

While Canadian consumers have long been vulnerable to fluctuations in world crude oil markets, says King, the increasing integration of the natural gas markets in North America has made Canadian retail natural gas prices more susceptible to the forces of North American supply and demand.

“By October of this year, consumer prices for heating oil and natural gas had risen by 42 per cent and 32 per cent, respectively, from year-ago levels, driving the overall consumer price index to 2.8 per cent,” says King. “With more retail heating price increases probably on the way, the CPI could hit 3.4 per cent early in 2001.”
-IE Staff