A Day's Wages for a Loaf of Bread

The Madness of a Lost Society

January 2, 2011

SGTbull07 (YouTube) - We didn’t stand up for truth, we didn’t stand up for the Constitution, we didn’t stand up for the rule of law. And now the day of reckoning is upon us. Please, prepare.

India Holds Emergency Meeting to Deal with Price Inflation

December 31, 2010

Business Insider - Prime Minister Manmohan Singh chaired an unannounced meeting with the Cabinet Committee on Prices yesterday, sources tell the Business Standard.

Maybe he's considering a revision to previous claims that inflation will be down to 5.5 percent in March from 7.48 percent in November, because recently the prices have just been rising.

The topic of discussion included soaring prices on fruits, eggs, meat, fish, milk, onions and other vegetables. Onions have surged to $1.67 per kilo, which compares unfavorably to the average daily wage of $2.23. Food inflation is now at a ten-month high of 14.44%.

German Inflation Unexpectedly Quickens as Prices Jump Most in Eight Years

December 29, 2010

Bloomberg - Inflation in Germany, Europe’s largest economy, unexpectedly accelerated in December as prices surged in the final month of the year.

The inflation rate, calculated using a harmonized European method, increased to 1.9 percent from 1.6 percent in November, the Federal Statistics Office in Wiesbaden said today. That’s the highest since October 2008. Economists expected an unchanged reading, according to the median of 13 estimates in a Bloomberg News survey. From November, consumer prices jumped 1.2 percent, the biggest monthly gain since December 2002.

Germany’s economy is growing at a faster pace than its euro-area peers as countries such as Greece, Ireland, Portugal and Spain grapple with a sovereign debt crisis. That’s widening the divergences in the 16-nation currency bloc, making it harder for the European Central Bank to set policy suitable for all its members.

“The increased inflation pressure will likely remain a temporary phenomenon, the outlook remains unproblematic,” said Philipp Jaeger, an economist at DZ Bank AG in Frankfurt. “Still, the risk is rising that inflation may reach 2 percent in the euro region in December.”

European Inflation

European inflation held steady at 1.9 percent in November, in line with the ECB’s price-stability definition of just below 2 percent. The central bank, which has left its key interest rate at a record low of 1 percent since May 2009, this month forecast euro-region inflation will average about 1.8 percent next year and 1.5 percent in 2012.

German inflation averaged 1.2 percent in 2010, the statistics office said today. The Bundesbank predicts an average rate of 1.7 percent next year. It estimates the economy grew 3.6 percent in 2010, the most in two decades.

German consumer confidence will stay close to the highest level in more than three years as unemployment declines, boosting households’ willingness to spend, market research company GfK said last week. Retail sales rose the most in almost three years in October and business confidence surged to a record high in December.

In the German state of North Rhine-Westphalia, food prices rose 1.2 percent in the month and 3.8 percent in the year, a report from the state’s statistics office showed earlier today. Heating oil was 5.6 percent more expensive than a month ago and cost 28.7 percent more than in December last year. The price of crude oil has gained more than 6 percent in the past month.

The price of package tours soared more than 20 percent in December due to the Christmas holiday season.

“A bigger monthly increase in the consumer price index is pretty normal in a December due to seasonal patterns,” said Thomas Kraemer, a statistician at the Federal Statistics Office. “We always see a big rise in December as travel costs jump. We’ll get a normalization in January.”

Food Prices Drive China’s Inflation Rate to Two-year High

November 25, 2010

Globe and Mail - ...The ChinaHush blog calculated last week that 100 yuan now buys 30 fewer apples, 90 fewer eggs and 200 grams less cooking oil than it did in November 2009. There have been reports of people clubbing together to buy their food in bulk in an effort to get lower prices.

Even McDonald’s Corp. has been hit, with the hamburger chain -- which is popular among China’s middle-class youth -- announcing an 8-per-cent hike in the cost of a Big Mac at its outlets across China.

The rising cost of food has sparked grumbling in the grocery aisles and growing concern among those who govern China’s 1.3 billion people. With most families spending half their income on food, the ruling Communist Party has long kept a close watch on food prices, viewing them as a possible trigger for unrest.

Beijing has already promised to boost vegetable production, pay food subsidies to poor families, and ensure fuel is available to farmers and truckers. The government has said it could go as far as imposing direct price controls, if necessary.

“We will try to ensure their basic lives and minimize the impact of price rises,” said Luo Pingfei, vice-minister of civil affairs.

The spike in food costs can be at least partially blamed on a year of extreme weather, with much of the growing season lost due to flooding in some parts of China’s agricultural heartland and droughts in others. China’s Banking Regulatory Commission this week called on banks to urgently offer emergency support to the agriculture sector amid severe shortages of rice, corn, sugar, vegetables and other crops.

But there are also concerns that the country’s broader economy may be starting to overheat after two years of growth fueled by massive government stimulus programs. Money supply in China has increased 54 per cent over the past two years, leading to speculation and price bubbles throughout the economy. Real estate prices -- already well beyond the means of the vast majority -- rose by 8.6 per cent in October, the 17th consecutive month of increases.

This week, the government banned hoarding of oil and coal.

“Illegal operators are using swindling, conspiring, price-fixing and hoarding to push up commodity prices,” the cabinet’s National Development and Reform Commission said in a statement.

The repercussions of China’s rising food prices go well beyond Beijing dinner tables. Amid reports of food hoarding, the government has hinted it will curb lending in an effort to cap the amount of money available to speculators.

“The government would not allow the same or more money to be pumped into the market as excessive liquidity has fueled fears of rising inflation,” said Wang Jun, a researcher with the China Center for International Economic Exchanges, in comments distributed Wednesday over the official Xinhua newswire.

Mr. Wang forecast the government might make between 7-trillion yuan and 7.5-trillion yuan available for new loans in 2011, compared with 9.6-trillion yuan in 2009 and 6.9-trillion yuan in the first 10 months of this year.

Hu Xiaolian, deputy governor of the People’s Bank of China, suggested Wednesday that the central bank would use “price tools” -- usually a reference to interest rates -- to slow lending. The government has already raised interest rates once this month, and twice in the past three weeks has ordered banks to raise the amount of money they hold in reserves.

The China Business News reported Wednesday that the government may raise its inflation target to 4 per cent for 2011, but that goal might still be unrealistically low. Economists at Standard Chartered Bank forecast that China will experience 5.5-per-cent inflation next year.

Any steps Beijing takes to curb inflation could slow the overall economy -- on pace to expand by an impressive 10 per cent this year -- at a time when many in Japan, Europe and North America are hoping that China’s growth could provide a badly needed boost to its trading partners.

China Raises Gasoline, Diesel Prices Amid Inflation Pressure

December 22, 2010

China Daily - China will raise gasoline and diesel prices 310 yuan ($46) per ton and 300 yuan per ton, respectively, beginning Wednesday, the National Development and Reform Commission (NDRC) announced Tuesday.

This is the second increase in fuel prices in two months after the NDRC raised the price of gasoline by 230 yuan and diesel by 220 yuan in October.

The adjustment would raise the benchmark retail price of gasoline by 0.23 yuan per liter and diesel by 0.26 yuan per liter, the country's top economic planning body said in a statement on its website.

The crude oil price had climbed to $88.81 per barrel in West Texas Intermediate while Brent North Sea crude oil jumped to $92.74 per barrel as of Monday, a record high since October 2008, according to the NDRC.

In the past two months, international oil prices had increased more than 8 percent.

The Chinese government adopted an oil pricing mechanism at the start of 2009 that allows the NDRC to adjust retail fuel prices when the international crude oil price changes by more than 4 percent over 22 straight working days.

However, the fuel price hike was still unexpected as China is facing tremendous rising inflation pressure, with the country's consumer price index (CPI), a measure of inflation, accelerated to a 28-month high in November of 5.1 percent.

But the government promised that the price move would not further worsen inflation, as the NDRC roughly estimated that the rise would only add 0.07 percentage points to December's CPI level, according to the statement.

Liu Zhenqiu, vice director of the NDRC's price department, said the NDRC had considered "the current consumer price level and the overall supply and demand condition in the domestic oil market" and postponed the price hike, which also did not exactly follow the international price trend.

Market observers also said the fuel price hike would have limited effect on the country's consumer price levels but, rather, place pressure on the consumer sentiment, as the government had already worked hard to retain surging prices.

Read More...