Rising commodity prices are a permanent new feature of the new global economic landscape. Their ascent reflects the world’s shift in economic power from west to east. It is time we got used to it.
Recent price rises have been extraordinary; so much so that Robert Zoellick, World Bank president, warns of “a toxic brew of real pain”. He was talking mostly about those in poverty. Yet with food prices doubling since 2000, and oil and metals rising three or fourfold, no one is immune.
This is not just a story about loose US monetary policy, or the rise of large commodity businesses such as Glencore. Instead, we are seeing the growing pains of emerging market success. Gone are the days when rapid Asian growth was taken to reflect strong US or European demand. Chinese consumers now contribute almost as much as America’s to global consumer spending growth, while Chinese investment has outstripped the US since 2001. Global decoupling, once a fantasy, is our new economic reality.