Do commodity prices signal inflation?

Owen Humpage

Economic Commentary, 2011, issue May

Abstract: Do the rising commodity prices we have seen in recent years reflect basic supply-and-demand developments in various commodity markets, or are they the fi rst signs of inflation? In practice, it?s not always easy to tell the difference - for the public or policymakers - but fundamentally different they are. Central banks can do nothing about relative commodity price pressures, since central banks do not produce commodities. Likewise, commodity-price shocks do not impair the ability of central banks to control inflation in principle, but they can greatly complicate the task.

Keywords: Inflation (Finance); Prices (search for similar items in EconPapers)
Date: 2011
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