Monday, November 12, 2007

China's October Inflation Matches Decade High of 6.5%

After viewing this kind of data it should be clear that China is no longer exporting deflation and is supporting tame CPI numbers around the globe. It looks more and more that China will export meaningful CPI inflation. Jeff Matthews has also some comments on this topic in “An Inflationary Spiral Out Of China” . It will be interesting to see how much longer the Chinese officials are able to keep the poorer people "calm". Maybe the Chinese should adopt some of the US statistics to calculate the CPI number......

Nachdem man sich diese Daten ansieht sollte jedem klar sein das China schon seit einiger Zeit keine Deflation exportiert. Zukünftig wird wohl das Gegenteil der Fall sein. Jeff Matthews hat zu diesem Thema ebenfalls einige Anmerkungen “An Inflationary Spiral Out Of China” . Sollte China das Problem nicht in den Griff bekommen bin ich mal gespannt wie es um den sozielan Frieden besonders unter den Armen bestellt ist. Evtl. sollten die Offiziellen sich ein paar Anregungen bei der Ermittlung der CPI Nummer aus den USA holen. Habe mir sagen lassen das man dort besonders kreativ ist.....


China's October Inflation Matches Decade High of 6.5%
Nov. 13 (Bloomberg) -- China's inflation accelerated in October as food prices jumped, increasing pressure on the central bank to raise interest rates for a sixth time this year.

Consumer prices rose 6.5 percent from a year earlier, matching the decade high in August, the National Bureau of Statistics said today, after gaining 6.2 percent in September. That was more than the 6.3 percent median estimate of 20 economists surveyed by Bloomberg News.

Pork prices climbed 55 percent, adding to the surge in vegetable and cooking-oil costs that's spurred government subsidies for farmers and crackdowns on price-fixing to avoid social unrest. October's record $27 billion trade surplus pumped cash into the economy, stoking inflation that's twice the 3 percent pace the central bank targets.

``Food inflation has expanded into other categories -- energy, labor and asset prices,'' said Chris Leung, senior economist at DBS Bank Ltd. in Hong Kong. ``Everyone in China is feeling inflation, especially the poor.'' He expects another rate increase this year.

The yield on one-year central bank bills issued today rose from the sale a week ago on speculation rates will rise. The notes were sold at a yield of 3.94 percent, a 0.15 percentage point increase.

The CSI 300 Index of stocks fell 1.4 percent as of 2:34 p.m. in Shanghai. The yuan traded at 7.4271 versus the dollar after closing at 7.4123 yesterday. Food prices account for a third of the consumer-price index. For the first 10 months, consumer prices climbed 4.4 percent.

``Food inflation has expanded into other categories -- energy, labor and asset prices,'' said Chris Leung, senior economist at DBS Bank Ltd. in Hong Kong. ``Everyone in China is feeling inflation, especially the poor.'' He expects another rate increase this year.

A stampede at a supermarket sale of cooking oil killed three people on Nov. 10 in the central city of Chongqing, state media reported. Soaring consumer prices helped trigger the Tiananmen Square protests that were crushed by the army in 1989.

In October, vegetable costs jumped almost 30 percent from a year earlier. Prices for edible oil surged 34 percent, while the cost of eggs rose 14 percent.

Price increases for non-food items were 1.1 percent, the same as in September.

There's pressure for inflation to accelerate further.

The government this month raised prices for gasoline, diesel and jet fuel as crude oil surged to records.

Producer prices jumped 3.2 percent in October from a year earlier after climbing 2.7 percent in September, the statistics bureau said yesterday. M2, the broadest measure of money supply, rose 18.5 percent in October from a year earlier.

``Money supply is growing very fast and that is worrying because it may push inflation higher,'' said Paul Cavey, an economist at Macquarie Securities Ltd. in Hong Kong.

Three days ago, the People's Bank of China ordered lenders to set aside 13.5 percent of their deposits from Nov. 26, the highest proportion since at least 1987. The central bank has pushed the benchmark one-year lending rate to a nine-year high of 7.29 percent.

The central bank last week forecast full-year inflation of about 4.5 percent this year, up from 1.5 percent in 2007 because of expectations for prices to rise and pressure from food, energy and labor costs. Inflation of 3 percent is the central bank's annual target.

A sixth increase in interest rates is likely this year, according to a Bloomberg News survey of economists.

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4 Comments:

Blogger jmf said...


Greed & Fear: It’s only just beginning….

12:36 AM  
Blogger jmf said...


Treasury Market Inflation Anxiety Renewed by Dollar


TIPS returned 10 percent this year, the most since 2002, compared with 7.3 percent for all Treasuries, according to indexes compiled by New York-based Merrill Lynch & Co. Ten-year TIPS yield 2.43 percentage points less than Treasuries, a gap that represents the rate of price increases investors expect over the life of the debt. As recently as September, the difference was 2.19 percentage points, the narrowest in almost four years.

4:31 AM  
Anonymous Anonymous said...

why does the china post has to be linked to 1989? that's 18 years ago and the western media was totally clueless about the truth behind the incident.

10:22 AM  
Blogger jmf said...

Moin,

i think it is still important to recognize that there is still lots of "pressure" for individuals if you don´t agree with the official opinion.....

Even the "don´t do evil" Google was forced to shut down web sites that are "controversial".

I´ve seen besides the business coverage way too many examples where people that have protested against something ( even for something more environmental friendly that is in line with the new official language ) were put to jail....

It doesn´t hurt to remember that China isn´t a democracy....

10:38 AM  

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