Sunday, December 5, 2010

China in a virtuous cycle of rising costs

HSBC China PMI hits 8-month high, inflation rises
Costs paid by manufacturers rose at the swiftest rate in 28 months, driven by higher raw material prices; the input price sub-index is now up almost 36 points since July.
Markit, the British research firm that compiles the PMI for HSBC, said the output price sub-index was at a level "indicative of a substantial rate of inflation".

The 24/7 Wall Street Blog summarized the problem thusly:
China may be one of the possible causes of a growing worldwide inflation of raw material prices. It has created its own virtuous circle as it buys more gold, but the cycle has begun to turn vicious as it presses into other markets like oil. The Chinese economy may be huge, but it is not immune from the sharp increases in the price of imports–price increases it has been critical in driving.

No comments: