Skip to comments.China's future inflation is a present headache
Posted on 01/22/2010 4:53:45 AM PST by Cheap_Hessian
BEIJING (Reuters) - Wang Zihua's last pay rise was two years ago and the 56-year-old post office worker in the northern Chinese city of Harbin is concerned his 1,200 yuan monthly salary is being eaten away by rising prices.
Chinese inflation remains tame, but prices have been creeping up in the past few months and policymakers may not only have to step up their rhetoric but also the pace of monetary tightening to prevent Wang's fears from becoming a reality.
"I really worry that prices may rise more quickly in the future, especially for rice, meat and vegetables. After all, we can skip buying things like clothing and entertainment, but we can't skip food," Wang said.
Inflation picked up to 1.9 percent in December, its highest in 13 months, though still low by international standards.
Some economists have dismissed the rise as a result of volatile food prices and bad weather, but these factors could profoundly affect consumer and corporate behavior, in turn determining how fast prices may rise over the next few months.
China's central bank has been trying to fulfill its promise to manage inflation expectations this year by cracking down on speculation in the property market, curbing rampant loan growth, guiding market rates higher and lifting bank reserve requirements.
However, double-digit economic growth in the fourth quarter of 2009, accelerating consumer price rises, and surging exports all shorten the odds that the central bank will go farther and raise interest rates perhaps as early as this quarter.
(Excerpt) Read more at reuters.com ...
RE :”double-digit economic growth in the fourth quarter of 2009”
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