High rates of productivity growth in China have allowed for the production of a wide range of goods at low prices despite the increased costs of inputs. In a highly competitive globalised world market and credible monetary policies, product price increases have remained low or prices have even fallen in some instances.
Oil and food prices, however, appear to be posing more of a threat to the global inflation outlook than other commodities. Nevertheless, contrary to initial fears, the impact of rising oil prices has had less of an impact on inflation and output than in previous episodes of oil price increases.