Since then, distant futures prices have risen sharply. In early August, prices for delivery in 2011 of light sweet crude breached $ per barrel, in line with recent increases in spot prices. This surge arguably reflects the growing presumption that increases in crude oil capacity outside OPEC will no longer be adequate to serve rising world demand going forward, especially from emerging Asia.
Such parallel shifts may occur because of temporary changes in wage and inflation mark-ups, or – more concerning from a central bank’s perspective – the incipient dislodging of inflation expectations. In an extreme scenario, the entrenchment of disinflationary developments could sustain a downward drift in the Phillips curve and unmoor inflation expectations.