Everyone talks about structural deflation pressures in China as a result of rampant industrial overcapacity - but the reality is that the phenomenon of falling upstream prices in the mainland is overwhelmingly due to falling global fuel prices over the past few years. And the same is true for weak PPI pricing in the rest of EM as well.

Now crude oil is surging as a result of the Iran war. This could be a very temporary trend, of course, but if the conflict drags on and prices stay high, we will suddenly wake up with a rather different inflation outlook in China and other emerging markets in the second half.