Sunday, December 12, 2010
Chinese inflation spikes on food costs
As China continues at a fantastic rate, some problems are beginning to trickle down and present themselves. One of those issues would be the high rates of inflation that has plagued the food market especially. Food prices have grown 11.7%. Yes, 11%! In order to stave off runaway inflation, China has committed to both raising its interest rates as soon as possible and to exercise a more "prudent" monetary policy starting in 2011.
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Yes, I did find that food prices have grown so much when I went back to China for summer break.
ReplyDeleteRaising interest rates is a good idea, because it wll decrease money demand. And the government need to decrease money supply, too. But the increase in price of food didn't influence our life as much as we thought, because the price of food in China is very cheap, 11% increase would not be too big.