Front page of today’s WSJ: Inflation, Spanning Globe, Is Set to Reach Decade High:
Inflation is back.
After several years of relative stability, a wave of rising prices is washing over the world economy.
Some of the factors driving inflation vary from country to country: union-negotiated wage hikes in Germany, pork shortages in China, an electricity squeeze in South Africa, pay rises for civil servants in India.
But the fact that inflation is rising almost everywhere suggests some of its causes are global. As crops are sold for alternative energy production, food prices have soared: The price of rice, the staple for billions of Asians, is up 147% over the past year.
The “several years of relative stability” annoyed Barry Ritholtz of the Big Picture blog — he points out that prices have been rising for years. I think he misinterpreted the author’s meaning of “relative stability.” In this context I think it is meant more about the social order; how the Chinese define the word, that is. Although prices have been rising for years, they are now causing social unrest and “instability”, especially in the developing world.