Specifically, over the past two years, the twelve-month change in the core PPI for crude materials has risen rather dramatically, from –9.4 percent to 17.1 percent, and the twelve-month change in the core PPI for intermediate materials has risen from –1.3 percent to 1.8 percent. Do these developments imply a significant increase in inflation risk at the level of the final consumer?
The answer is almost certainly not. Two points should be made. First, the recent movements in commodity prices are hardly surprising; they are in fact quite normal for this stage of the business cycle.