China growth stokes inflation fear

IS inflation about to rear its ugly head again? In an ominous sign that it might the cost of basic commodities - from coffee to copper wire - is soaring.

The numbers are startling. In the past year steel has risen by two-thirds, copper, lumber and coffee a half, oil and pork bellies a quarter and aluminium a fifth.

Blame China's rush to industrialisation and the world economic recovery, which are boosting demand for basic materials.

Blame a shortage of supplies as well. Falling prices over many previous years drove producers out of business.

The West has enjoyed a holiday from inflation by moving manufacturing and some service jobs to cheaper countries, to cut costs and prices. Rising raw material costs will bring stronger upward pressure sooner or later.

US bonds guru Bill Gross sees inflation and higher interest rates ahead and is aggressively moving money into inflation-protected bonds.