On the demand side theory there are two arguments on the demand push that might be driving commodity prices. On the one side, there is an argument that holds that world demand has driven prices higher and higher. This argument assumes that even if the US is on recessionary stage and some OECD economies are cooling down, there is still strong demand from emerging economies that exercise a strong demand push. This theory is based obviously on the decoupling of emerging economies. According to this theory growth in emerging economies is not any more export led to OECD economies but it is based on internal demand and export to other developing countries. Over 50 % of China’s exports fly to emerging economies. Moreover, for some agricultural commodities the biofuel industry's need for grains has introduced another source of demand. On the other side, there is a strong demand push coming from what has been called an investment led demand. That is, commodities are not just seen as raw materials but also as a store of value. Low yields on fixed income and high inflationary expectations together with shaky equity markets make these alternatives assets an interesting alternative allocation. As an example of investment demand for commodities it is just worth mentioning that gold Exchange Traded Funds hold more physical gold that the European Central Bank.

On the supply side theory there are people that believe that there has been a strong pull in supply that could justify the high commodity prices. In the case of oil, its production has slightly increased in the last year. For other commodities such as metal or agriculturals things are a bit of the same. In terms of current stocks and capacity production, supply seems to have suffered with a small retracement. The specific case of agricultural commodities has also been affected by very poor and volatile crops in the last years. Global warming has produced more adverse weather conditions for agricultural crops. In the case of metals, capacity production has not pace up with consumption, probably due to the fact that investment in capacity has not increase as recent prices thought to be just temporary spikes.

Identification on the source of price inflation needs to be addressed for correct economic policy implementation.