It is hard to credit now but, until early this summer, policymakers regarded inflation as a serious threat. No longer. Deflation is the spectre now haunting the advanced economies. This rapid shift in focus highlights the impact the credit crisis has had on the real economy. But inflation, though falling, is still relatively high in most large economies, and much will depend on what policies are put in place over the coming weeks and months.

Consumer prices may fall temporarily if commodity prices continue to tumble. However, this is no immediate cause for concern. Big central banks have an explicit or implicit inflation target, anchoring expectations of future price growth.