Today, after experiencing the worst oil shock ever with the barrel hitting nearly 150 USD in July last, the world is growing aware that several issues connected with the economic crisis arise from oil prices. The first and immediate impact of oil rising prices is of course on bunker and gasoline, which in turn have an indirect but general impact on consumer prices through transportation. But the knock-on effect doesn’t stop here. The use of cereal crops to produce bio-fuels as alternatives to traditional oil based fuels has directly propagated inflation to food commodities triggering a parallel food price crisis. Those direct and indirect price increases have generated widespread cost/supply driven inflation alarms that in turn have pressured central banks to tighten monetary policy through higher interest rates.
