Prices of oil and other commodities rose rapidly in the first eight months of 2006, with petroleum and metals reaching new highs. Oil prices were supported by tight spare capacity in global markets, geopolitical tensions and continued risks in Nigeria. Metals on their part have been boosted by strong demand growth, especially in emerging markets, capacity shortages and labour disputes.

The instability in the international crude oil prices continued to pose a downside risk to the economies of the world. Global outturn has been affected by the developments on the international oil market during the year under review. Crude oil price started the year with US$63.86 per barrel in January and reached a peak at US$74.24 per barrel at the end of July 2006. It fell sharply from US$73.87 per barrel in August to US$63.49 per barrel in September 2006 and it is expected to remain stable in the near-outlook.

International Commodity Prices (2000 Q1 – 2006 Q3)

Gold was sold at US$550.77 per fine ounce and reached a peak of US$673.55 in May 2006, before falling to US$600.49 in September 2006.

The price of cocoa was £900 per tonne in January 2006 and reached a peak at £933 per tonne in July, 2006, before falling to £840 per tonne in September.

In the diamond market, the price per carat was $31.23 in January, reached a peak of $38.33 in April, and declined to $32.12 in September 2006.

The bauxite sub-market experienced relatively stable prices, starting the year with $24.36 per tonne and reaching $25.18 per tonne in August 2006.

Signs of inflation and inflationary expectations are now visible in the United States and other emerging economies such as Argentina, India, South Africa and Russia, requiring central banks in major economies to tighten monetary policy. Rising energy prices pushed up inflation in many countries during the period under review. However, upward pressure on core inflation has generally continued to be moderate. Several Central Banks across the globe responded to this heightened inflation concerns by tightening monetary policy during the year.

Source: Ministry of Finance / 2007 Budget, Ghana