But a jump in inflation caused by higher commodity prices and a rise in VAT in an economy with spare capacity is quite different from one caused by excess demand and a pay-price spiral.

ECONOMIST: The inflation scare

One more reason not to lose sleep over the surge in oil prices is that, unlike the rises in the 1970s, it has not occurred against the backdrop of general commodity-price inflation and global excess demand.

ECONOMIST: Oil��s pleasant surprise

Then, excess demand resulted in higher inflation, huge current-account deficits and rampant asset-price inflation.

ECONOMIST: China's economy