A barrel of oil costs more than $70 once more. Even though oil remains at half its price from its peak a year ago, the rebound now looks impressive, and could affect the inflation expectations of both traders and central bankers.

Short-term inflation expectations are tightly linked to moves in the oil price. When oil peaked last July, US inflation-linked bonds were priced for inflation of 2.76 per cent on average over the next two years. By December, when oil hit bottom, the bond market expected deflation over the next two years, at an average of 6.95 per cent per year.