The index for non-fuel commodity prices in 1988 rose by 23% in U.S. dollar terms, mainly because of stronger-than-expected growth in demand in industrial countries and the effects of inclement weather.
The increase in commodity prices in 1988 is attributed in part to steep increases in metal prices and to rising food prices which were the result of the drought in North America.
The high global demand for metals that began in 1987 reduced stocks, reflecting the idling of excess capacity in the early 1980s and the reluctance of producers to reactivate this capacity unless they were signs strong demand would continue, the IMF study says.
For 1989, the IMF is projecting no rise in prices of non-fuel commodities in dollar terms.
The medium-term outlook calls for an average annual increase of about 4% in commodity prices in dollar terms.
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