Inflation in China: HOT HOT! HOT!

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"Could emerging China bubbles turn the commodities bull market into rubble?"

Inflation in China may be getting too hot to handle! Could emerging China bubbles turn the commodities bull market into rubble? China's inflation rate for consumer prices came out at a much hotter than expected 2.7%. That was sizzling compared to Januarys 1.5% rise and it was also a 16-month high. This sharp increase will make Chinese officials worry about potential trouble spots and may make them more aggressive trying to battle those inflationary demons.

So far it is obvious that steps by the Chinese government to let some air out of their rapidly expanding bubble have been a failure. Despite the aggressive move to raise reserve requirements on banks and step back from standing behind regional banks, it's obvious China is going to have to take away more of the punch bowel to help extinguish these inflationary flames.

A Financial Times article, 'Fears Grow Over China Property Bubble Despite Efforts at Cooling' said "Chinese real estate prices accelerated last month, rising by their fastest pace in two years despite government efforts to cool the market amid fears of a looming property. Prices of commercial and residential property in China's 70 largest cities rose 10.7% in February from the same period a year earlier, up from the 9.5% year-on-year gain in January, according to China's statistics bureau.

Analysts say housing price increases are significantly higher - and this is what mostly concerns the government because they have a direct impact on people's lives and their satisfaction with Communist party rule.

At the same time, however, China's exports surged rising a whopping 45.7% from last year. There is increasing pressure on China to allow its currency to increase in value as the dollar peg is obviously hurting other exporters.

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