Inquiring minds are gazing east tonight where China’s authorities contemplate setting a limit to prices and increase the cost of money. Earlier in the week it was reported that prices for staples, especially food, rose rapidly. October inflation stands at 4.4 per cent (a 25-month high) and consumers rush to buy up everything they can to beat the next hike. Its the worst inflation for China in a decade.
Expectations that prices might continue to rise has led to panic buying, accentuating the upward trend:
The Ministry of Commerce released figures yesterday, indicating that in the first two weeks of November, the average wholesale price of 18 staple vegetables was 62 per cent higher than in same period last year, and 11.3 per cent higher than at the beginning of this year.
In the big cities however, ordinary people are complaining that food prices are rising at a faster rate, with several hikes a week.
The authorities are now expected to set a ceiling on food prices. However, many observers are unconvinced that it will work. They point out that in May, when Beijing set limits to various food items, speculation continued and wholesale prices for meat rose.
In recent days, line-ups have appeared as people try to buy as much as possible ahead of expected price rises. Last Saturday, Zhang Juan, a 77-year-old retiree, told the South China Morning Post that she left home at 7.15 am to go to the shop, which opens at 8 am, but found about 50 people in front of her.
Hmmm…price controls are even hinted at and immediately lines appear.
And Democrats in the US will say it is just a coincidence.
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