OTTAWA -- Commodity prices key to the Canadian economy were up last month largely as a result of better economic conditions, BMO Capital Markets said Monday.

BMO said its commodity price index was 151.6 for August, up 6.1% from a month before. The index is gauged so that a value of 100 represents 2003 prices.

Prices are up 17.7% in August from their February lows but still down 32.7% from a year earlier. BMO said.

"The increase in August reflected fresh evidence that the global economy is moving onto a firmer footing, continued U.S. dollar weakness, and producer discipline," BMO said in a report. "However, prices are likely to undergo significant volatility over the next few months as markets attempt to gauge the sustainability of any increase in demand."

There were gains in the categories of metals and minerals, oil and gas, and forest products, while agriculture was the lone of the four groupings in the survey to see a decline.

The petroleum products index was up 6.6%, most of that coming from oil. BMO gave credit to the beginnings of global economic recovery and "production restraint." It said natural gas prices remained depressed largely because of high inventories caused by a lack of industrial demand during the recession.

The metals-and-minerals index was up 8.5% as a result of U.S. dollar weakness and better economic prospects, prompting more customer demand from sectors such as automotive and housing.

Forest-product prices were up 3.1% last month, the BMO index showed, with prices rising for both lumber and pulp as inventory shrank and demand rose.

Agriculture prices fell 4.8% in August, BMO said. Wheat prices were pressured from a bigger-than-expected harvest, and livestock prices also fell.