Inflation will be China's next big export to the world

Business Insider | 1/10/2017 | Wolf Richter, Wolf Street
donuzumaki (Posted by) Level 3
Click For Photo: http://static1.businessinsider.com/image/587542e3ee14b61b008b7927-1190-625/inflation-will-be-chinas-next-big-export-to-the-world.jpg

China’s producer prices – which measure what is sometimes called “inflation at the factory” – soared 5.5% in December, from a year ago. This was far hotter than economists had expected, though they’d expected a pretty good jump, with the Bloomberg consensus guess coming in at 4.6%.

In November, producer prices had already jumped 3.3% from a year earlier. There have now been only four months in a row of producer price increases, after they’d been falling in a long bout that began in early 2012. Prices fell as much as -5.9% year-over-year in mid- to late 2015, under the full onslaught of the twin furies, the global commodities bust and overcapacity in China.

Chart - Economics - Producer - Price - Index

This chart by Trading Economics shows the producer price index for the past 10 years. I added the red line; it shows that producer prices jumped the most since September 2011:

The commodities price crash has now largely bottomed out, though there is no guarantee that it won’t try to seek an even lower bottom. Compared to a year ago, many commodities trade at higher prices, and the deflationary pressures of commodities have flipped to inflationary pressures.

Price - Pressures - Factories - Wage - Increases

This adds to ongoing price pressures at Chinese factories, such as wage increases. They all raise input costs. With margins getting squeezed from the bottom up, producers will be trying to pass on these higher costs to the global supply chains via higher asking prices. And if they get those prices to stick, they’ll export inflation to the rest of the world. And that’ll be a sea change.

By comparison, consumer price inflation looks practically sanguine. The National Bureau of Statistics also released its consumer price index today, which everyone agrees doesn’t account nearly enough for soaring housing costs, among other items, and is not a reliable indicator of increases in the costs of...
(Excerpt) Read more at: Business Insider
23 other people are viewing this story
Wake Up To Breaking News!
No matter where you go, there you are.
Sign In or Register to comment.

Welcome to Long Room!

Where The World Finds Its News!

LongRoom Culture
Man Kayaking Is Surprised By Surfacing Whales! This man is at the right place at the right time.  He must have noticed the...
Adorable Ragdoll Cats Gandalf and Flame Ride Atop A Robot Vacuum Cleaner! These cats are so cute and seem to be content to clean...
Heidi The Australian Shepherd Fetches Her Bed And Settles Down To Watch Planet Earth! This beautiful dog has a very interesting...
Slow Motion Video of Balloon Being Punctured Underwater! Bursting a balloon underwater makes an impressive special effect when...
Amazing Score By Little League Player! When you are running for home and the catcher is waiting there with the ball to tag you,...
Bird Surfs Down Snow Covered Roof, Grabs His "Surfboard," Flies Back Up To The Roof Ridge And Surfs Down Again!
Three Human Kaleidoscope! Brilliant synchronized hand motions that imitate the images you see in a kaleidoscope!  This is very...
One Little, Two Little...Wait... Three Little Kittens All Stretching! It only looks there are two kittens in this container...
Cat Is Rude and Keeps Scratching Sheep's Face, Then Sheep Gets Even! A few rather innocent sniffs and this sheep gets scratched...
Dog Caught Stealing a Bread Roll! Roll?  What Roll?  Oh, you mean this roll...  This dog is so adorable after being caught in...
Cuttlefish Disguised As A Hermit Crab! This cuttlefish is doing a great imitation of a hermit crab as he's trying to make an...
How To Make A Rose Love Letter Card! This paper craft is pretty and clever and could be used for almost every occasion where...
Prairie Dog Wearing A Dress and Eating Cheese! Prairie Dogs make interesting pets and this one is adorable the way it chews on...
Slo Mo Guy's Video Experiment - Getting Crushed by Huge Water Balloon! The popular YouTubers The Slow Mo Guys, are known for...
Teamwork! Two Big Dogs Carrying A Stick Together Followed By A Little Dog! Branch Managers!  These two big black dogs are...
How To Make A Little Teapot Short and Stout! Okay, well, maybe this is a tiny teapot, but that aside, making a tiny teapot is...
Twin Boys Jump At The Same Time and It Looks Like A Mirror Image! These two twin boys are playing and not really paying a lot...
Herd Of Elephants Hurry To Meet New Orphaned Calf! This herd of elephants welcomes a new addition to their herd and they hurry...
Bald Eagle Picks Fish Right Out Of Lake! This bald eagle swoops down out of the sky and grabs this fish.  It has been observed...
Dog Relaxes On Couch! This dog looks like he has plans to stay on the couch for a long time!  He starts sitting up, then falls...
Triple Front Bike Flip by Ryan Williams! This flip called a "Nothing Front Bike Flip" is executed by Ryan Williams in this...
Shot From Medieval War Machine - A Trebuchet! This amazing construction of a medieval war machine called a trebuchet...
Woman Teaching Cow How to Jump Over A Fence! If you don't have a horse, but you have a cow, well, why not teach it to clear a...
Dogs and Raccoons Play Together At This Gathering! A Dog Party?  Oh, wait, no, those are raccoons, too, a dog AND raccoon...
Horse Receiving A Pat Doesn't Want It To Stop! This beautiful horse is welcoming this attention from most likely his owner when...
Cheerleader Collapses In Surprise! This cheerleader who is probably able to turn back-flips and do all sorts of gymnastic moves...
When Just Having a Beautiful Private Pool In Your Backyard Isn't Enough, Add An Endless River Around It!