This week, The Economist writes about the state of inflation around the world, including how big a threat rising prices pose and whether commodity price increases may be contributing to political unrest. Is inflation, and commodity price inflation especially, currently a threat to economic growth or political stability? How should central banks, in the rich world and in emerging markets, handle the rise in commodity costs? Is core or headline inflation the right measure to focus on?

Jahangir Aziz:

... the structural shortage of food is not because there has been a trend decline in productivity. It is because demand has substantially outstripped supply as for the first time in probably centuries the emerging market world is actually seeing sustained growth which, importantly, is trickling down. With the trickle down, food demand, especially of high protein products, has surged. And this is a very good thing (as food prices had been kept low for much of the last century by keeping millions around the world half-fed), but it is a demand problem. Of course, improved supply is the solution, but given the persistence and size of the problem what is needed is a new generation of technological breakthroughs in agriculture that aren’t here just yet.