It is now clear, of course, that expectations about equity returns were unrealistically high, and perceptions of risk too low, in the late 1990s. Moreover, the bursting of the tech bubble, and  BIS Review 58/2002  3  the corporate scandals in the United States, could well leave many investors feeling unenthusiastic about equity markets for some time.
However, in 2007–08, as overall inflation accelerated, so did this component. One explanation for this is that, with capacities being stretched, producers had significant pricing power. Consequently, the intensification of supply-side drivers, which is clearly visible in the graph that year, spilled over into a more generalized inflationary process.