Chinese Inflation
As we start our work on indicators, let's take into account that Chinese inflation in China this month is 6.5%.
What's caused this? Well, you don't need to look very far. The trade gap has increased by 33% since last year - increasing demand. In addition, the number of pigs in the country has fallen by 10% because of blue-ear disease. Why are pigs an important indicator in China? Because pork forms part of the staple Chinese diet and demand is very inelastic. A 10% cut in supply has led to a 49% increase in pork prices. Non-food inflation is actually very low - so the solution is to either eat less pork (chicken is equally good for you) or breed more pigs.
Unfortunately, breeding more pigs would lead to the same factory-farming practices that led to the rapid spread of blue-ear disease in the first place. So it looks like chicken is king in China at the moment. Buy shares in KFC now!
What's caused this? Well, you don't need to look very far. The trade gap has increased by 33% since last year - increasing demand. In addition, the number of pigs in the country has fallen by 10% because of blue-ear disease. Why are pigs an important indicator in China? Because pork forms part of the staple Chinese diet and demand is very inelastic. A 10% cut in supply has led to a 49% increase in pork prices. Non-food inflation is actually very low - so the solution is to either eat less pork (chicken is equally good for you) or breed more pigs.
Unfortunately, breeding more pigs would lead to the same factory-farming practices that led to the rapid spread of blue-ear disease in the first place. So it looks like chicken is king in China at the moment. Buy shares in KFC now!
posted by Economics 101 at
4:37 pm
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