As is well known, although the market operations of a central bank – by exchanging monetary base for government bonds – are transactions in financial assets that are not perfect substitute, they should be neutral with regard to price formation if arbitrage in financial markets operates fully.
More recently, the increase in global dairy prices has added to these demand side pressures by boosting incomes at the farm gate. Increases in commodity prices such as oil and other imported raw materials have also added to inflation pressure by increasing the cost structure of the production process.