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Marius Botha, deputy manager of the Threadneedle Commodities Crescendo Hedge Fund, said that despite inflation figures across the world looking benign right now and central banks preoccupied with tackling deflation, commodity prices are being pushed up as early movers anticipate inflation.

Retail and institutional investors have already allocated significant money to commodities in a bid to hedge inflation and this trend is expected to continue.

Botha said: "The rapid inflow of money into commodities in the last few months has been significant and has pushed up prices in the futures market.

"As we saw in 2006 through to 2008, the relative size of real money investors have put into the commodity markets makes it self-fulfilling. A good example of this can be seen with oil.

"With US and European crude oil and product inventories at their highest levels in almost 20 years, oil is currently showing extremely bearish fundamentals.

"But despite this bearish backdrop, the price of oil has rallied from US$45 in April to a six month high of US$68 in May.

"This is not so much driven by the expectation of an economic recovery, but to new money seeking a macro inflation hedge.

"To an extent this can also be seen in the performance of commodity related equities versus the underlying commodity, where equities have outperformed the underlying commodity they represent."

Meanwhile the demand from emerging markets, in particular from China and India, continues to grow.

However, according to Botha, although the economic growth rate of these countries has slowed it is by no means over and the current global downturn has merely slowed growth and their increasing demand for commodities will return.

Botha said: "In fact, there have been a number of economic indicators that suggest 'green shoots' are already starting to emerge in China.

"One of these indicators has been the loosening of restraints in its money supply by lowering bank reserve requirements and encouraging lending. This has already led to an increase in loan growth by 39 per cent year on year.

"This has been directed at infrastructure and urban fixed asset investment which will improve the fundamentals for some global commodities, especially base metals which are particularly leveraged to construction and industrial production."