The Really Worrying Part About Chinese Inflation

A very ominous graph

Inquiring minds are reading the fastenating data on China in Gregory White’s post on with the rather lenghty title “The Really Worrying Part About Chinese Inflation:It’s Being Driven By Food Prices”. The data was just released last night and is, to say the least, startling…

Chinese CPI data last night pointed to a sharp increase in inflation in the country, up 4.4% year-over-year.

Waverly Advisors point out that the breakdown is even more worrying.

Prices for food in China surged in October, up 1.1% month-over-month. That’s a 10.1% rise year-over-year for food alone.

Real Estate also looms large, but specifically in development. Development investment is up 36.5% year-over year.

With this happening, Beijing will almost to act.

From Waverly Advisors:

With inflation rising at a rapid pace, Beijing has a stronger political argument to continue to curb investment inflows and increase direct commodity market intervention measures while the clear evidence of a still frothy financial sector suggests that yesterday’s reserve increases will be followed by more tightening measures (both rate increases and higher reserve ratios, possibly even direct price controls in some real estate sectors ) in the near-future.

Once again, we are living in historic times.


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