Over the past decade, world prices of key resources have risen sharply and have been highly volatile. Between 2003 and 2013, world fuel prices rose fourfold, metal prices trebled and food prices roughly doubled. This sharp rise, affecting most commodity groups, is in marked contrast with much of the 1980s and 90s, when real commodity prices generally declined. In this policy insight we call this recent phenomenon the ‘great resource price shock’ and explore its impacts on inflation and living standards in the UK. We also discuss the factors likely to influence its future evolution and the policy responses available to mitigate it.
The key findings are summarised in an infographic.