The question is therefore whether these channels have indeed given rise to the recent moderation in prices and, if so, whether they are likely to continue to perform this stabilising role in the future.
The current surge in commodity prices, including food more recently, which is resulting, in particular, from supply being unable to match higher demand from emerging markets, reminds us that globalisation can also lead to upside risks to world inflation. Furthermore, global events could become so important in driving inflation that they affect the conduct of monetary policy.