Industry Sector Weekly by Lloyds TSB

Expressing concerns around the uncertainty of the future path of inflation, both the Bank of England’s November Inflation report and the ECB’s November bulletin released this week highlighted rising commodity prices as a potential source of higher domestic prices in the coming months. Commodities stoke inflation

Expressing concerns around the uncertainty of the future path of inflation, both the Bank of England’s November Inflation report and the ECB’s November bulletin released this week highlighted rising commodity prices as a potential source of higher domestic prices in the coming months. Commodity prices have been moving higher as global economic conditions continue to improve and as commodities, such as food and metals, prove to be in short supply. Moreover, rising input costs are becoming more of a concern for the corporate sector which, given relatively weak demand conditions domestically, may not be passed on to distributors or final demanding consumers. Whether these prices will be sustained depends not only on the pace of growth in both developed and developing economies, but also on domestic exchange rate movements.

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