By Gerson Freitas Jr. and Joe Deaux
Commodities jumped to their highest in almost a decade as a rebound in the worlds largest economies stokes demand for metals, food and energy, while poor weather harms crops and transportation bottlenecks curb supplies.
The Bloomberg Commodity Spot Index, which tracks prices for 23 raw materials, rose 0.8% Tuesday to its highest since 2011. The gauge has climbed more than 70% since reaching a four-year low in March of last year.
With some major economies emerging from the pandemic, metals are rising as manufacturing picks up, and the return of motorists to the roads is boosting energy prices. Meanwhile, crops like corn, wheat and sugar have surged as dryness hurts plants in Brazil, the U.S. and Europe, while China gobbles up supplies. Hedge funds have been raising their bullish wagers on commodities, signaling a renewed inflationary bet.
The soaring cost of raw materials are raising the prices of everything from homes to food to toilet paper and diapers and stoking fears of inflation around the world. U.S. Treasury Secretary Janet Yellen, a former chair of the Federal Reserve, said in a broadcast interview earlier Tuesday that interest rates may have to rise to ensure the economy doesnt overheat -- though she later said she wasnt predicting rate increases and didnt anticipate a bout of persistently higher inflation.