If the banking and housing crisis has not yet made you queasy about the economic outlook, concerns about rising inflation probably will. Or so it is asserted. Central banks issue frequent warnings; analysts refer to the rise of inflation as horrific or disturbing and in the blogosphere talk is of a new inflationary era.

The inflation risk is certainly not trivial, especially in emerging countries, but there are two major reasons why the new scares should not be taken at face value in advanced economies yet. Moreover, to the extent that food and energy prices are a problem, governments should respond soon for fear that central banks – duty bound to contain inflation expectations – end up making the financial crisis worse.