Commodity Prices Up 12.5% in a Year — but Down 1.3% in October

Sonal Goyal

04 November 2026 05:13 PM AEDT

Commodity Prices Up 12.5% in a Year — but Down 1.3% in October

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Key Highlights

The RBA's index of Commodity prices is up 12.5 per cent over the year in SDR terms.
The index fell 1.3 per cent in October, with rural, non-rural and base metals all lower.
The result depends on whether prices are measured in SDR or Australian dollars.
Commodity prices matter for export Earnings and the terms of trade.

Australia's export earnings depend heavily on what the world pays for its resources and farm products. The Reserve Bank of Australia (RBA) tracks those prices each month through its Index of Commodity Prices. The preliminary reading for October 2026 delivers two messages at once: prices are well up on a year ago, yet they slipped in the latest month.

In special drawing rights (SDR) terms, the index fell 1.3 per cent in October, after rising 0.9 per cent in September. Over the year to October, it was up 12.5 per cent.

The headline figures

The October release, published as a preliminary estimate, shows:

Monthly change, SDR terms: down 1.3 per cent (after a 0.9 per cent rise in September).
Monthly change, Australian dollar terms: down 0.3 per cent.
Year-ended change, SDR terms: up 12.5 per cent.
Year-ended change, Australian dollar terms: up 4.6 per cent.
Bulk commodities (spot-price version), SDR terms: down 2.1 per cent in October, up 13.9 per cent over the year.

The RBA labels the October figures preliminary.

Why does the RBA publish two versions, and why are they so different?

The SDR is a basket of major international currencies maintained by the International Monetary Fund. Measuring commodity prices in SDR terms gives a sense of what global buyers are paying, largely independent of movements in the Australian dollar.

The Australian dollar version shows what those prices mean once converted into local currency, which is closer to what Australian producers actually receive. When the two diverge, the gap reflects Exchange Rate movements.

Over the year to October, commodity prices rose 12.5 per cent in SDR terms but only 4.6 per cent in Australian dollar terms. That gap is consistent with the Australian dollar having appreciated against the currencies in the SDR basket over the period, so a given rise in world prices translated into a smaller rise in local-currency terms. The same effect worked in reverse during October: the monthly fall was 1.3 per cent in SDR terms, but only 0.3 per cent in Australian dollar terms.

For reference, the RBA homepage recorded the Australian dollar at US$0.7023 and the trade-weighted index (TWI) at 65.1 at 4.00 pm on 2 November 2026.

A broad October pullback

The October decline was not confined to a single category. According to the RBA, the rural, non-rural and base metals subindices all fell in the month. That breadth makes October look like a general easing rather than a fall in one commodity.

The bulk commodities measure, based on spot prices, fell further, down 2.1 per cent in SDR terms.

Over the year as a whole, the picture is very different. The RBA notes that the annual rise in commodity prices was broadly based, with two exceptions: iron ore and alumina.

The breadth of the annual gain matters. When price rises are spread across many commodities, the boost to export earnings is less dependent on the fortunes of a single market. At the same time, the two exceptions show that not every market shared in the rise.

The bulk commodities spot measure rose 13.9 per cent over the year in SDR terms, a little more than the overall index.

How this fits the RBA's broader outlook

The commodity price index is separate from the RBA's Inflation and growth forecasts, but it touches on several themes in the November 2026 Statement on Monetary Policy (SMP).

Energy. The SMP points to higher energy prices from the Middle East conflict as adding to inflation pressures. The RBA's Brent Crude assumption is US$109.5 a barrel for December 2026, easing to US$79.1 by December 2028. The December quarter 2026 oil price assumption is 35 per cent higher than in August.

The exchange rate. The RBA's forecasts assume the TWI stays flat at about 65.3. The 2 November reading of 65.1 is close to that assumption. Because a stronger currency lowers the local price of imports, and a weaker one raises it, the exchange rate assumption is one of the conditioning inputs for the inflation forecasts.

Global risks. The SMP identifies stronger AI-related Demand as a scenario that could keep global growth and inflation higher. The Board's statement also notes that "There continue to be heightened uncertainties about the outlook for domestic economic activity and inflation."

What commodity prices do and do not tell us

Commodity prices matter for export earnings, but they are not a direct measure of consumer inflation. The RBA's inflation target applies to consumer prices. The most recent figures show headline CPI rose 3.9 per cent over the year to the September quarter and 4.3 per cent over the year to the month of September, while the trimmed mean, an underlying measure, rose 3.7 per cent over the year to the September quarter.

The RBA expects both headline and underlying inflation to stay above 3 per cent until the end of 2027. Its forecasts have headline inflation peaking at 4.5 per cent in the December quarter of 2026.

On 3 November, the Monetary Policy Board raised the cash rate target by 25 basis points to 4.85 per cent, by a majority of six to three. The majority said "there is an increasing risk that higher inflation expectations will become embedded." The statement gives no reasons for the three members who preferred to hold at 4.60 per cent.

The bottom line

The RBA's preliminary Index of Commodity Prices for October 2026 shows prices up 12.5 per cent over the year in SDR terms, but down 1.3 per cent in the month, with rural, non-rural and base metals all lower. In Australian dollar terms, the annual rise was a more modest 4.6 per cent and the monthly fall just 0.3 per cent, reflecting currency movements.

The annual gain was broad, except for iron ore and alumina. One month does not make a trend, and preliminary data can be revised. The next update to the index will show whether October's pullback was a pause or the start of something more lasting.

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