In a busy week for economic data, perhaps the most important statistic won’t come from America or even a U.S. corporation.
It’s the general direction of prices in China that could shape investment markets, our economic outlook and influence our food and fuel costs.
Chinese consumer prices are rising by about twice the annual pace of America’s inflation rate. Imagine finding pork chop prices higher by the month.
The good news for America is Chinese inflation today is similar to ours. It is concentrated in energy and food. While incomes have been rising in China, those higher costs have not found their way into flat-panel TVs, iPhones, or T-shirts we import from China each month.
Not yet.
China’s inflation has been fueled by the central government’s efficiency to quickly put money into the economy at the height of the economic crisis in 2008.
China has been building roads, bridges, high-speed railroads and airports whether or not there is current demand for them. Now the government is busy trying to soak up that money by raising interest rates and curtailing bank lending.
Price trends in China may seem like a world away but they threaten America’s tepid economic growth. Rising Chinese paychecks could find their way to higher “Made in China” price tags.
At the same time, fighting inflation by slowing down the Dragon economy could choke off a bright spot for American companies and their workers.
By By Tom Hudson
Source: www.miamiherald.com
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