Mounted China's soaring inflation could hit UK shoppers
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Chinese vendor organizes maps price at a supermarket in Hefei, is China Photo: AFP/Getty Images
5 1Pc annualised rate of inflation, maximum 4 4pc in October, led by an 11 7pc jump in food prices, the Statistical Office national Chinese (NSB) said.
Economists said the highest expected, they should translate into an "aggressive tightening" China's money supply, would weigh on investors when global markets reopen Monday.
Inflation figures follow more strong commercial data Chinese expected last Friday which showed exports increased from 34 9pc-on-year in November and imports jumped by 37 7pc. Bank of China, the China's Central Bank has responded to rising by increasing the ratio of obligation to reserve for banks by 50 basis points.
Neumann, Fred's Asian economic research at HSBC in Hong Kong, said he expected the market to react to the inflation rate. "It raises the more aggressive risk of clamping and which will weigh on the sense of the world market in the short term", he said.
"The risk to the rest of the world and the United Kingdom is [Chinese] growth could slow, which could hit financial confidence worldwide, as China is considered the last locomotive driving mess it finds itself in."
Mr. Neumann has declared a Chinese them higher inflation would feed through to higher prices for products manufactured in the UK "in the next year or two" stores, just as Chinese raw materials such as cotton, this year already increased the cost of clothing.
Statistics on official trade for October, published last week, showed that China is second most important source of the country of import.
"If China raises prices in manufactured products which means prices higher for Western economies," said Neumann "" "" "China is already significantly pushing up world prices and which will be felt in the pockets of UK consumers.
Economists expect to raise loan and deposit rates, the responsibility of the Central Bank of China as it did in October, to fight against inflation. However, Wu Xiaoling, a former Deputy Governor of the Bank said yesterday that it was not possible because of the risk to draw cash flow fuel inflation.
Mr Neumann said another tool for China to reduce its National Bank ready target for 2011, which is estimated at 7 billion yuan. "It can now be lower," he said.
But Mr. Neumann added that there is "a silver lining" Chinese higher inflation. "This means that China is going to lose some competitiveness, which means ultimately there somewhat in the end of the tunnel for Western manufacturers as they can compete on a lawn more level." It is a few years away, but I would say highest Chinese inflation is part of the global rebalancing. ?
The State Council, China's cabinet strives to curb food prices by initiating efforts to increase the production of vegetables and other basic products. Authorities crack down on hoarding and speculation, as say, are partly responsible for price increases.
The NSB also stated industrial output, an indicator of economic health, increased by 13 3pc in November of the previous year, while retail sales increased by 18 7pc, important to the Government's efforts to build domestic consumption to stimulate growth.
In contrast, UK consumer prices is supposed to have remained flat at 3 2pc in November, when the official figures are published on Tuesday.
Howard Archer, Chief Economist UK of IHS Global Insight, said he expected the ICC aboard up to 3 5pc in the coming months "due to higher oil and commodity prices".
Saudi oil Minister Ali al - Naimi said that was not necessary for an increase in oil production to a meeting of the Organization of the of petroleum exporting countries (OPEC) in Quito, Ecuador.
OPEC, which supplies about 40pc of oil in the world, has not changed since the end of 2008 quotas, when he announced the biggest ever cut its production as demand world collapsed. Crude oil rose above $90 per barrel, the week last for the first time since more than two years.
