Is the latest global inflation scare justified?

The markets have swung too far from worrying about deflation towards worrying about inflation. To be sure, inflation will be higher than otherwise over the next few months as a result of the recent surge in global commodity prices. Tax increases will also play a part, notably in the UK (VAT) and Japan (cigarette duties). Indeed, inflation may even have turned positive in Japan last month. Headline inflation has already risen above the comfort zone in China and has been too high for a while in India.