As an illustration of this increase, the RBA’s own Index of Commodity Prices is at an all time high and has risen by almost 50 per cent over the past year (Graph 2). Graph 2  This upward pressure on commodity prices is occurring at a time when conventional measures of the global output gap remain quite large.
Many of the advanced economies continue to operate well below full capacity and unemployment rates are still very high. These large output gaps mean that there is little upward pressure on domestic costs and prices in most advanced economies, with core measures of inflation generally still very low.