Wednesday, Aug 13, 2008
Future import of inflation.
BBC: Venezuela lifts basic food prices
Something we don't talk about on HPC which is equalling important.
Importing inflation. China producer price inflation ( PPI) 10%, India's PPI 12% Vietnam 25%.
Why is this important. we import most of our good and services from these companies, hence we will have to pay more in future.
Respite for inflation downturn. I don't think so. Also remember that Oil, Petrol, diesel is still subsidised in these countries and price pressures are slowly being released into the economy.
Posted by deepak @ 08:04 PM (293 views) Add Comment
1 Comment
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1. stillthinking said...
Importing inflation ? Are we sure we believe that the inflationary acts of foreign governments cause prices to increase in the UK ? If Australia doubled their money through printing and we didn't then Sterling would be worth twice as many Australian dollars.
The price of foreign goods in the UK won't change because of their inflation. Because of our inflation, yes, but theirs no. Imports are more expensive in the UK because of -our- inflation, and -our- low interest rates causing Sterling to lose value. Or even that some goods are more expensive because of higher demand.
The UK government reflationary policies such as a negative real interest rates, simply show up as more expensive foreign goods. Really, we are paying the same real value for foreign goods, but our own real wealth has already been transferred to assist borrowers, so the real value of your cash is gone. The goods are the same.
If anything, foreign inflation would make foreign goods cheaper, not the other way around.