A leading economist has issued a stark warning as a key global index hits levels that spell trouble for households across Australia.<\/p>\n
Spiking commodity prices across the board, from oil to agriculture and base metals, mean higher global inflation is \u201cas certain as night follows day\u201d.<\/p>\n
That is the call from leading economist Stephen Koukoulas, who said his favourite leading indicator for future inflation was at \u201cnear record highs\u201d.<\/p>\n
The CRB index has risen more than 80 points since the outbreak of war in Iran and was up 6.68 per cent in the past month.<\/p>\n
But looking longer term, it has spiked by 32 per cent compared to the same time last year, and Mr Koukoulas said this could spell a change of tack from central banks around the world. <\/p>\n
\u201cNow, why I like the CRB index is that it\u2019s a broader measure than the Reserve Bank index of commodity prices,\u201d he explained in a video posted on Monday.<\/p>\n
\u201cThis is a global index. So, for example \u2026 it has a very high weighting towards energy commodities, oil, gas, heating oil and those sorts of things. <\/p>\n
\u201cIt has an even higher weight of weights for agriculture goes into food production, of course, and that\u2019s things like corn, wheat, coffee, orange juice, those sorts of things which are very important for food and other clothing manufacture \u2013 an important part of inflation.\u201d<\/p>\n
He said the index also took the price of base metals such as copper, nickel, aluminium and precious metals such as gold and silver into account.<\/p>\n
Then there were livestock indicators for lean hogs and live cattle: \u201cSo it\u2019s a broad index of commodity prices. <\/p>\n
\u201cAnd when it\u2019s going up and accelerating, it points to higher inflation,\u201d he said.<\/p>\n
\u201cBecause all of those things that I mentioned and several more \u2026 when they go up, you see the price of food, for example, going up. <\/p>\n
\u201cSo if the wheat price increases or lean hogs increase, you\u2019re going to get some inflation pressures there. <\/p>\n
\u201cBut even a lot of the base metals \u2026 if those prices increase, they\u2019re important inputs into a lot of the manufacturing process that\u2019s going around.\u201d<\/p>\n