Overnight, the threat of further Chinese tightening multiplied as a result of food price inflation. A basket of 18 key vegetables saw their prices increase by 62.4%, year-over-year, in the first 10 days of November.
But just how likely is Chinese tightening?
Waverly Advisors feel that it is now a near certainty, based on the political realities within China.
The fact that Premier Wen Jiabo chose a supermarket as the location for a press appearance to comment on anti-inflationary measures today indicated how seriously Beijing is taking the potential disruptive impact of rising cost at the cash register.
But this isn’t just a Chinese problem. 40% of the world’s population, found in China, India, and Brazil, is seeing their food prices skyrocket as a result of price inflation. Note India’s has actually decreased, but remains close to double digit territory.
From Waverly Advisors:
Photo: Waverly Advisors