Jewelry and PPI in May

We continue the comparison of actual data and our price index predictions given to various commodities. The prediction for jewelry and related products was given in this post. We predicted that the price index for jewelry would be losing its pace relative to the overall PPI.

Unlike gold ores, jewelry and jewelry products had a much larger deviation from the trend as Figure 1 demonstrates. Hence, the force returning the difference, and thus, the price index to its

trend value should be stronger than that for gold ores. We defined the new trend as similar to the trend between 2001 and 2008 but with a negative slope.

This prediction is supported by new data, as shown in Figure 2. There is a turn to the new trend. We expect that the difference will continue its growth in months to come. Jewelry prices will be likely falling till the end of 2009.

Figure 1. The difference between the PPI and the index for jewelry. After July 2008, a strong decrease in the difference has been observed. This deviation must return to the new trend.

Figure 2. In April and May 2009, the difference demonstrated a clear turn to the long-term trend. During June and some months in the future, the difference will be approaching the new trend. This means that jewelry price will be falling.