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.
Beijing may have 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.
Photo: Waverly Advisors