According to standard monetary analysis, central banks should not react to a temporary increase in the price level, induced for instance by higher commodity prices, unless it generates second-round effects to other costs and prices that would permanently push inflation up. But what if the increase in commodity prices is not a temporary phenomenon, but rather a lasting feature of the current state of economic development?

After all, the economic literature since Paul Samuelson’s 1957 article, Intertemporal Price Equilibrium (“A Prologue to the Theory of Speculation”, was the subtitle), suggests that the price of scarce resources should continuously increase, at a pace in line with the rate of return on capital. Over the past 10 years, commodity prices have increased on average by 18 per cent a year (24 per cent energy, 4 per cent food, 10 per cent industrial raw materials).