http://www.bloomberg.com/news/2011-...s-global-inflation-concern-stokes-demand.html Expect a pull back on prices once the shock settles?
Not to go too off topic, But why does inflation occur in China if the Economy is growing? The US is having inflation problems, but it's not because their Economy is growing. In fact, Doesn't the US WANT the economy to grow? So why is therefore China trying to slow down economic growth?
Doubt it. China's inflation isn't really that bad at the moment and the central bank of China has proposed 'measures' to counter inflation (wonder if they'll work!). One of the things I joke about is that the Chinese government has no idea how much 'fiat currency' is currently in circulation. Not too sure if I'm joking anymore though... China is trying to slow down the economy growth because they don't want the price level to rise rapidly. By artificially lowering their price level they can stay competitive on an international scale and you will be able to still see plenty of "Made in China" goods. Think about how many manufacturing firms you see in Australia and compare that to China. If their price level raised they will lose all their manufacturing to Vietnam or Cambodia etc and their economy will tank a fair bit.
I don't know enough to argue effectively but 5% price increase in 1 month for goods sounds bad to me and would scare a lot of chinese wealthy to protect there wealth with metals. Some good news next week could see panic ease.
China's inflation is basically down to increases in food prices because a lot of people there are moving out of agricultural areas and into cities - they're losing supply and gaining demand, so prices of food are going up and that pushes their CPI up (which is one measure of "inflation" and although there are others, that's the one everybody is talking about). The U.S.A.'s inflation is caused by the Fed just printing more money and increasing the total amount of it in the system. More money means people can afford to pay more for the same stuff they were buying before, so they do and prices rise to match what people are willing to pay. Basically, American inflation is driven by increased money supply and China's inflation is driven by increased demand for goods.
Oh my bad, I didn't read the article properly You're correct, 5% is crazy in a month. 5% in a year would be borderline let alone a month. Edit: Actually reading the bloomberg article suggests that the CPI rose 5.4% while inflation was 5.2% from the past year. I think that sounds more likely, 5% a month is crazy and unlikely to happen anywhere except Zimbabwe. The thing about Chinese though, the really really rich ones will already have diversed their investments into Gold and Platinum whereas the middle class are suffering. There's been a lot of news in Hong Kong with regards to Chinese tourists hoarding Gold and Gold selling in HK has been a booming business for quite a while now. However, the Chinese still haven't really considered the silver market as of yet and once they actually do, you can be sure the prices will skyrocket
