Record Rise and Record Fall Leave IDEX Polished Price Index Down 7.5% in 2022
January 05, 23
(IDEX Online) - 2022 proved to be a year of highs and lows, as the Index hit its highest point in over a decade,
then nose-dived to close the year down 7.5 per cent overall (from 142.86 in January to 132.15 in December).
Even through the pandemic, aside from the very early months of 2020, the Index was climbing, and as
lockdowns and travel restrictions were eased, it surged as never before, reaching a peak in March of 156.77.
Then the combined effects of the war in Ukraine, and a 40-year inflation high in the US brought it crashing
down. The US Federal Reserve printed an estimated $3 trillion to support the economy during the pandemic,
with the predictable consequence that prices would shoot up at home and far beyond. The Index had, as the
graph below shows, been in overall decline since mid-2011, albeit with localized peaks and troughs.
However, if we zoom out, going back to 2004, we see that despite the rollercoaster year we've just had, the
big-picture trend remains upwards. The annual average of the Index in 2022 was higher than 2021. In fact, it
was its highest point ever. Overall the gains outweighed the losses.
During December we saw a 0.76 per cent drop, down significantly on the hefty 2.62 per cent fall in November.
As with most months during 2022, the decline was more or less a straight line. Its average value during
December was 132.14, compared with 134.30 in November. October was 137.56 and September was 140.94,
compared with 144.02 in August. In July it was 147.59, down from June (150.01), May (151.28) and April
(153.30) The Index had been in decline since mid-2018, but at a much more gradual pace. It hit a low point in
April 2020, with the first lockdowns hit, but the overall trend since then had been upwards.
Month-to-month polished diamond prices were down again in December, but not by as much as previous
months. The 1.6 per cent figure represents the lowest drop since July. The intervening months all saw declines
of at least 2.0 per cent. Monthly price increases peaked in February, before Russia invaded Ukraine, at 6.2 per cent and have been in negative growth since April.
Year-to-year polished diamond prices fell during December, for the first time in two years. Despite all the
turbulence, year-to-year prices had been climbing, until now. In the final month of 2022 they fell by 4.0 per
cent, the biggest drop since May 2020, when the world was gripped by Covid lockdowns.
Year-to-year growth peaked in March 2022 at 27.9 per cent, but has been declining steadily ever since. It was
1.8 per cent in November and 5.4 per cent in October. The overall trend had been upwards since the depths of the pandemic in April 2020, albeit with a dip last September and October.
The general trend for polished month-on-month prices in December was down, but not as down as November.
All sizes shown below fell slightly less than in the previous month, with the exceptions of 0.5-cts (down 2.8 per
cent as against 2.2 per cent) and 4.0-cts "investor goods", which bucked the trend and saw a 1.5 per cent
increase in December, compared with a 1.0 per cent decrease in November. In addition, 3.0-cts goods
recovered from a 2.3 per cent drop in November to 0.9 per cent in December.
Year-on-year polished prices provide less cause for optimism, with smaller goods showing marked declines.
Worst-hit were 0.5-cts, down 12.4 per cent. All other sizes, up to and including 2.0-cts, were also down. 3.0-cts
goods increased by 2.7 per cent, compared with 9.1 per cent the previous month. 4.0-cts remained steady at
1.3 per cent, no change from November.
Prices for all sizes shown below kept on falling in December, with the notable exception of 4.0-cts goods which
have been the most resistant to the recent decline, and which are on the increase.
Assessment: Things are still looking bleak, as they have been for much of 2022, but there may be cause for
cautious optimism as the decline appears to be slowing in month-to-month prices. In China the Covid peak is
over after lockdowns were relaxed, and there are currently - and remarkably - zero new cases. This could be
encouraging news, or not. Inflation in the US is slowing slightly, down from 7.7 per cent in November to 7.1 per
cent in December, according to the Labor Department.
But the war is still raging in Ukraine, manufacturers in India are working well below capacity and holiday
spending on jewelry in the US fell 5.4 per cent year-on-year according to Mastercard SpendingPulse's report on
US retail sales across all payment types. Overall spending across all sectors rose 7.6 per cent in the same 1
November to 24 December period.