What are the implications?
. To date, most developing countries have been able to absorb the balance of payments impact. Higher export earnings or inflows of capital and transfers helped finance the higher commodity imports. The overall effect of the commodity price hike on the terms of trade has varied widely across countries. In about half the countries of sub-Saharan Africa, the negative impact has been offset by rising food and fuel export prices. Higher food prices have been passed through to domestic markets in most countries, but the responses to fuel price increases have varied (the pass-through for oil-exporters averaged slightly over half of that for oil importers). Concerns center on possible second-round effects on inflation and the poor: • Headline inflation is up in many countries. This is a particular concern in developing countries where food expenditure shares exceed expenditure shares in other goods by a large margin. Food price increases accounted for almost 70 percent of 2007 headline inflati
