Monday, 19 May 2008

Inflation in China

From the BBC comes an article and a video about rising inflation in China

http://news.bbc.co.uk/1/hi/business/7395416.stm article

http://news.bbc.co.uk/1/hi/business/7395738.stm video

a) What evidence is there from the 2 sources of cost push and demand pull elements to the inflation?
b) What is meant by the quote "China will export its inflation" and what effect will this have on the UK?
c) What actions could the Chinese govt take to try and reduce the inflation rate.

Food prices hit the real incomes of Chinese people much more than their western counterparts. Research from Deutsche Bank finds that the weighting of food in the consumer price index varies greatly from country to country:

USA 13.8%
Euro Zone 14.5%
Brazil: 29.3%
Russia: 40.2%
India: 26.9%
China 33.6%

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