Global Inflation - Haven't we been here before?

The last few weeks I've been thinking about inflation, particularly with respect global commodity prices.

Oil is obvious and does not need elaboration.

Grains and other foodstuffs less so depending on where one lives. I heard the other day that China has doubled meat consumption in the last five years. For every kilo of meat produced 7 kilos of grain are required for feed. China has gone from being a major grain exporter to a net importer - a trend that will continue. The economist.com produced an excellent graph of trends here.

Meanwhile Brazil, Indonesia and others are dumping food production for more profitable bio-fuel plantations - sure, we will save the world by starving more people.

There seem to be real parallels with previous global cycles. Housing price collapse in various countries driving central banks to lower interest rates whilst prices of staples are rising. Inflation always seems to be difficult to measure until after the event. It would seem that central banks may have underestimated the threat (again) and we will look back on 07 as the year we turned a corner from the last decade of unprecedented economic growth and stability to a period of fear uncertainty.

On a brighter note, there still seems to be plenty of liquidity around - although at the moment most of it is being pooled by a post credit crunch knee jerk from the major banks and finance houses.