China's March Inflation: No Way to Go but Up

Zhong Jin submits:

Last week, news of China raising its interest rate by 0.25% barely moved the market. As reported by the Wall Street Journal, most analysts expected that there would be only one interest rate raise left in PBOCs pocket this year. They reasoned that inflation would peak during the first half of 2011 and gradually drop in the second half largely due to a higher base.

These analysts might be too optimistic in their forecasts. The first thing that came to mind is a series news stories by both Chinese and English media on the National Development and Reform Commission (NDRC), a powerful economic planning body in China. Near the end of March, NDRC asked Chinese coal miners to keep the coal prices low, as coal is the major input for generating electricity in China. Then, NDRC urged Unilever (UL) and other consumer goods producers to stop raising prices. A few


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