Chinese households feeling inflation pressure to buy commodities.
Weiss
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March 11, 2010, 8:27 PM EST
March 12 (Bloomberg) -- China's accelerating inflation has started to erode household savings, threatening to spur purchases of property and stocks and fuel asset-price pressures.
Consumer prices rose a more-than-forecast 2.7 percent in February, the most in 16 months, the statistics bureau said in Beijing yesterday. The increase means the rate exceeds the one- year deposit rate of 2.25 percent.
So-called negative real rates skew incentives to spending just as China's economy is already accelerating -- reports this week showed exports rose, industrial production accelerated and new loans exceeded forecasts. The central bank may raise interest rates within the next three weeks, Standard Chartered Bank Plc, Nomura Holdings Inc. and Royal Bank of Canada said.
A growing number of households will now realize that their deposits in the banking system are losing purchasing power, said Ma Jun, chief China economist at Deutsche Bank AG in Hong Kong. The jump in the inflation rate last month will increase the social and political pressure for a rate hike in the near term.
March 12 (Bloomberg) -- China's accelerating inflation has started to erode household savings, threatening to spur purchases of property and stocks and fuel asset-price pressures.
Consumer prices rose a more-than-forecast 2.7 percent in February, the most in 16 months, the statistics bureau said in Beijing yesterday. The increase means the rate exceeds the one- year deposit rate of 2.25 percent.
So-called negative real rates skew incentives to spending just as China's economy is already accelerating -- reports this week showed exports rose, industrial production accelerated and new loans exceeded forecasts. The central bank may raise interest rates within the next three weeks, Standard Chartered Bank Plc, Nomura Holdings Inc. and Royal Bank of Canada said.
A growing number of households will now realize that their deposits in the banking system are losing purchasing power, said Ma Jun, chief China economist at Deutsche Bank AG in Hong Kong. The jump in the inflation rate last month will increase the social and political pressure for a rate hike in the near term.
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--Severian the Lame
--Severian the Lame
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