China Inflation in 2007 Much Worse Than Predicted
According to this post predicting 2007 inflation in China, we should be at only about a 2% year over year rate of inflation right now.
If you live in China you know this is way off the mark. Prices are going up quite rapidly. This from today’s Wall Street Journal:
A surge in food prices pushed Chinese inflation in July to its fastest growth in a decade. China’s National Bureau of Statistics said its consumer-price index was up 5.6% in July from the same month last year, the highest rate of increase since 1997. Food prices were the main culprit, led by a 45.2% rise in poultry and meat prices.
While it is certainly possible the price of meat in China will come back down, inflation might keep up its torrid pace.
Why Inflation in China Hurts
If you have this kind of attitude, you’re a moron. Inflation in China means inflation in the rest of the world, as prices rising in one corner tend to push up prices everywhere else (rising meat prices in China = higher wages so workers don’t starve = higher priced everything at Walmart).
The people who care about inflation in China the most are people who live in China, of course, including people being paid in $US. Travelers to China will also need to bring a little more money along with them. Let’s see why with a hypothetical example:
Original Cost of Living Per Month, RMB: 8000
Original COL Per Month, $ ($1:7.9830 RMB): $1002.13
New Cost of Living Per Month, RMB: 8448
New COL Per Month, $ ($1:7.5764 RMB): $1115.04
Total YOY inflation for expats in China being paid in $ or travelers bringing $ to China: 11.26%
