---
title: "The Commodity-Consumer Price Connection: Fact or Fable?"
authors: "S. Brock Blomberg; Ethan S. Harris"
source: "Federal Reserve Bank of New York Economic Policy Review"
source_url: "https://www.newyorkfed.org/medialibrary/media/research/epr/95v01n3/9510blom.pd"
paper_id: "NY Fed Economic Policy Review, October 1995"
harvested: 2026-09-01
year: 1995
keywords: [commodity prices, CPI, inflation pass-through, deflator, indices]
pdf_url: "https://www.newyorkfed.org/medialibrary/media/research/epr/95v01n3/9510blom.pd"
---
## Abstract

Examines whether commodity price indices (JOC, CRB, and crude PPI) contain information about future consumer price inflation. Real commodity price indices are constructed by deflating the nominal indices by the CPI and **rescaling to a base of 100** (January 1980 = 100). Finds the levels of commodity indices are cointegrated with core CPI inflation, but the predictive content is largely absorbed once finished-goods PPI is included in the cointegrating vector — the commodity–consumer price link is real but weaker than popularly believed.

## Why it's in the StratMac library

- Documents the second display convention for de-dollarized commodity data: CPI-deflated, base=100 rebased indices (the JOC/CRB convention) — the index-rebase candidate from the staples rescale discussion.
- Its deflating-by-CPI methodology pairs with SM's deflating-by-GDP: both strip the dollar veil; they answer different questions (inflation-adjusted price vs. output-share cost).