As you will hear in a moment, we have already learned a lot. I’d encourage you all – those in the room and viewers elsewhere – to submit your questions and contributions via Twitter (#FutureForumBoE). Finally, let me thank Ranvir Singh, our moderator for today’s Future Forum, for keeping us on track today – and with that I’ll hand back to her. 5  All speeches are available online at www.bankofengland.co.uk/speeches  5
3  According to the Food Outlook from the Food and Agricultural Organization of the United Nations (FAO), 22 May 2008. BIS Review 68/2008  3  When we decide on the future direction of monetary policy, it is important to know whether the rising oil and food prices will have lasting or temporary effects on inflation. 4 It is difficult to know this in advance. We must follow developments closely. But we can receive some guidance by looking at the factors that lie behind the price increases. Increased demand, supply effects and portfolio investment behind rising commodity prices One reason for the high commodity prices is the increased demand in the world market from emerging economies. Higher incomes per capita in China, India and other rapidly growing economies have led to increased demand for food and also to changes in the patterns of food consumption. Demand for meat has increased in particular, which has in turn pushed up the demand for and prices of feed grain. This also spreads to other food crops. It is reasonable to believe that the demand for food in the world will remain high. Another important driving force behind the world demand for commodities is the investment in ethanol and biodiesel in recent years. The increased use of some food commodities in the production of biofuels limits the supply of food and increases the price of food crops.