Food Prices Cause Inflation in China

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In the old world, calories and credit were cheap. So was the fuel for cars. That was the old world, say, from 1974 to now, with a few inflationary interludes.

Today though, credit is tighter. Calories, while cheap in some places, are getting more expensive in others. And transportation fuel made from oil is going through the roof. Hmmn.

China’s State Council “pledged to support ramped-up production of pigs, grain and dairy products.

“Food prices have been the main culprit in Chinese inflation, soaring by 17.6 per cent in October from a year earlier, whereas non-food prices climbed by just 1.1 per cent,” we read in Reuters this morning.

Note to State Council of China: wage and price controls are no cure for a fundamentally inflationary situation. China reported a US$27.5 billion trade surplus in October. Over the last twelve months, the surplus is more like US$255 billion.

All that money coming into Chinese shores stimulates domestic lending and spending. And apparently, it makes people hungry too! There is probably some direct relationship between growing appetites and per capita net worth. Human beings have been incredibly resourceful—especially since the Green Revolution—in finding ways to feed so many people. With 6.5 billon of us, you’d better get your Big Macs while they’re still cheap.

By the way, we made an error yesterday. We said $1 of every Big Mac you eat will go Ronald McDonald Children’s Charities. That is not strictly correct. One dollar of every Big Mac you BUY will go to a good cause. So you see, you don’t even have to eat the Big Mac. You can give it to a starving teenager.

Dan Denning
The Daily Reckoning Australia

Dan Denning
Dan Denning examines the geopolitical and economic events that can affect your investments domestically. He raises the questions you need to answer, in order to survive financially in these turbulent times.
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Comments

  1. Stop promoting McDonalds already…Charity = tax writeoff + marketing tool.

    If they really wanted to give, they’d say “all profit from Big Macs for that day”. Bah.

    Reply
  2. Correct!!!
    Charity = tax writeoff + marketing tool.

    Reply
  3. i need more causes of inflation is food prices the only one

    Reply

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