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For several months now, we have been highlighting the commodity survey within the monthly ISM Manufacturing survey which asks respondents what commodities are rising in price and what commodities are falling in price.

In the past, peaks in troughs in this survey have been pretty reliable forecasters of the direction of inflation as is illustrated in the chart below. In the September survey, the ISM reported that on a net basis seven commodities had risen in price (fourteen up and seven down). This marks the lowest level of increases since June 2005, which implies that concerns in the market over inflation should continue to ebb.

click to enlarge