Commodity market disruptions, growth and inflation

Key takeaways

• Higher commodity prices will erode global growth, as the modest growth boost for commodity exporters will only partly offset the output losses of commodity importers.
• Rising commodity prices will also intensify global inflationary pressures. The effects will be strongest for food and energy prices, but spillovers to other components of inflation are likely.
• Recent shocks have been smaller than the 1970s oil shocks but broader-based, encompassing food and industrial commodities as well as energy. Nonetheless, structural changes, as well as stronger policy frameworks and nominal anchors, make stagflation less likely to return.