Introduction The South African economy continues to be impacted by a series of supply-side shocks emanating from the international energy and food markets. The effect of these shocks on the inflation environment is posing problems for economies around the world and a number of inflation-targeting countries are currently above their inflation targets. In certain advanced economies the response to these shocks has been complicated by the simultaneous effects of the banking and credit crisis that originated in the United States (US) sub-prime market. The electricity price increase granted to Eskom in April and the possibility of further increases, together with the weakening of the exchange rate of the rand, have also worsened the domestic inflation outlook in the period since the publication of the previous Monetary Policy Review in November 2007. Collectively, despite signs that the economy is responding to the tighter monetary policy stance, these international and domestic developments have contributed to deteriorating inflation expectations and signs of generalised inflation pressures emerging in the economy. As usual, the Monetary Policy Review analyses inflation developments and the factors that have impacted on inflation, followed by an assessment of recent monetary policy developments and a discussion of the outlook for inflation. Four topical issues are focused on in the boxes. The first box notes the recent changes announced by Statistics South Africa (Stats SA) which impact on the main inflation indices, while the second provides a global perspective on the surge in agricultural commodity prices. The third box reflects on the performance of inflation-targeting countries in the light of the global food and energy shocks, and the final box considers the impact on the global economic growth outlook of a slowdown in the US economy.