Do commodity prices signal inflation?
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.
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Provider: Federal Reserve Bank of Cleveland
Part of Series: Economic Commentary
Publication Date: 2011
Issue: MayOrder Number: 8