But there will always be a temptation on their part to try and recoup their margins. Under such circumstances, if there is a perception that monetary policy will accommodate these inflationary pressures they are likely to increase their prices. However, if there is a tightening bias in monetary policy, firms are more likely to be constrained in their price setting.
Weakening demand is partly responsible for keeping the price of oil and other fuels at historically low levels and for reducing the prices of other commodities.