Stagflation, Made In China Edition

Tyler Durden's picture

So much for the world's largest economy no longer overheating. CPI came ahead of expectations yet most other key economic indicators confirmed a slow down in the economy, even as borrowing appears to be picking up once again. Could China be exhibiting the very first symptoms of our very own stagflationary squeeze?

  • CPI at 5.3%, Consensus at 5.2%, previous 5.40%
  • PPI at 6.8%, Consensus at 7.0%, previous 7.3%
  • Industrial Production up 13.4%, Consensus of 14.7%, previous at 14.8%
  • Retail Sales 17.1%, Consensus of 18.0%, previous 17.40%

And more from Bloomberg, which was lucky enough to have the fake data embargoed in advance:

China’s consumer prices rose 5.3 percent in April from a year earlier, exceeding the government’s full-year target for a fourth straight month.

The gain was more than the 5.2 percent median forecast in a Bloomberg News survey of 30 economists and compared with a 5.4 percent increase in March. Producer prices increased 6.8 percent, the statistics bureau said today in Beijing.

Inflation is “the most pressing problem” facing China, Vice Premier Wang Qishan said at talks in Washington this week where the U.S. pressed for faster gains in the yuan. Economists’ median forecast is for one more interest-rate increase this year, adding to four since mid-October, as a dip in commodity costs and more favorable bases for comparison slow price gains in the second half.

“Another slight uptick in inflation is possible by mid- year, but it seems that for inflation, the worst is nearly over for China,” Alaistair Chan, a Sydney-based economist at Moody’s Analytics said before today’s announcement.

Fixed-asset investment grew 25.4 percent in the first four months of 2011 from a year earlier, today’s report showed. Retail sales rose 17.1 percent in April and industrial production gained 13.4 percent.

The government aims for full-year inflation of 4 percent as Premier Wen Jiabao eyes the risk that rising prices for basic goods and housing will fan social discontent. Commodities had their biggest weekly decline since December 2008 last week, aiding his campaign by trimming the nation’s import bill.

Officials have raised banks’ reserve requirements, reined in credit growth from the record levels of 2009 and 2010, restricted home purchases, and this month fined consumer goods company Unilever 2 million yuan ($300,000) for telling the media that it planned to raise prices.

The median forecast in a Bloomberg News survey of analysts is for the benchmark one-year lending rate to rise by a quarter percentage point to 6.56 percent by the end of the year. The People’s Bank of China let the yuan gain 0.9 percent in April, the fastest pace of appreciation this year.

“With economic growth stabilizing, policy makers signaling they are willing to tolerate faster currency appreciation, and global food prices stalling, inflation appears on course to decline over the second half of the year,” Wang Qinwei, a London-based economist with Capital Economics, said before today’s data were released.

Deutsche Bank AG estimates the yuan may appreciate at an annualized pace of 7 percent to 10 percent against the dollar over the next two months to reduce import costs before gains slow in the second half of the year as inflation drops “sharply.”

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Cdad's picture

Did anyone else catch that BlowHorn World [CNBC W] commentary after the release?  Good lord, it was...it was...incomprehensible.  

First, the high CPI was a number that was splitting hairs, the PPI was soooooo much lower than...."expectations"...that it was a leading indicator that inflation is over...and the miss on the industrial production, "Could be good, could be bad."

WTF?  It is way past time to start drinkin'.

Mr Lennon Hendrix's picture

It is beer o'clock ain't it?  Time to throw some fake money around the bar and tip the tender like I care.

CPL's picture

It is.  Time to crack a two four and watch it burn.

 

btw the markets will be awesome tommorrow.

bigelkhorn's picture

Its bleeding red here at the moment. China ready to burst? Hmmm.

That guy from FFT is oz is good, I been following him for a while and he called the market crash in 2008. 

I belong to his membership site, its awesome and has live videos and everything to follow along. 

Makes it easy to take money from the market even if you are a newbie!. 

His new monthly trading club is opening tomorrow, and over at :-

http://www.forecastfortomorrow.com/Trading-Club

Fish Gone Bad's picture

I gotta agree.  People who make obscene amounts of money generally keep their mouths shut, at least until they want to become philanthropists, they are not out hustling people. Speaking of hustling, what the fuck is up with that video anyway?  Even the bears talking about silver is made better.

Michael's picture

I just figured out what CNBC stands for; "Central Neo-Bank Cartel" channel.

The reporters on that channel are Central Neo-Bank Cartel employees.

This revelation makes it a lot easier to see who the reporters on CNBC actually are without the special glasses.

They Live - Obey, Consume, This is your God

http://www.youtube.com/watch?v=7Lwlx3GnLGs

Thank me.

A.W.E.S.O.M.-O 4000's picture

I love watching CNBC.

 

If by CNBC you mean Porno

Weisbrot's picture

I wonder what the real numbers are. Im also curious when the effect of compound price increases are really going to take off and show inflations ugly head.

Reese Bobby's picture

Chinese economic reports: "Making up numbers since 1998"

RockyRacoon's picture

This is just what they are "reporting".   Imagine what the numbers really are.

Weisbrot's picture

if other bogus numbers are any indication I believe the range is between 8% and 35% higher

Mr Lennon Hendrix's picture

Shit, China, buy more ipads.  WTF!

legal eagle's picture

And how long before higher Chinese prices show up at Walmart? Long bicycles.

Caviar Emptor's picture

China: rising wages, rising real asset values

US: falling wages, falling real asset values

That's the difference. They have a classic inflationary spiral from an overheated economy that may be transitioning slowly to stagflation. We're more advanced and sophisticated: we have deflationary changes in individual real incomes and net worth from falling real estate values and offshoring along with spiraling cost of living inputs. We win!

Dr. No's picture

Watch the dollar strength. This is exactly what timmah prayed for. Sell china equities and buy something denominated in another currency. Let see, not euro cuz of Greece, but what else? Humm

legal eagle's picture

Did you catch that crap on Sqwak on the Street this morning about US and Chinese workers wages getting close to even? I hire trained Experienced IT guys in Shanghai for $1350 Reminbi a month, how many dollars is that again?

legal eagle's picture

Tyler, privileged you responded. You do a great service on this website! I will read the link, but although wages are rising I don't see parity anytime soon.

legal eagle's picture

Yep, read the whole post. States the case better than me. I am not worthy.

legal eagle's picture

Just respectful, and not obstinate. I would not needlessly offend. You?

Fish Gone Bad's picture

I don't think there is a Fight Club rule against sucking up, but I am pretty sure it is frowned upon.  If anyone wants to pay some respect, contribute $.

JimBowie1958's picture

Frowned on by who? And I do plan to donate, just cant at the moment - I am merely one of the working plebes out here in Flyovia.

JimBowie1958's picture

Why is stating the obvious sucking up?

 

km4's picture

Inflation is “the most pressing problem” facing China, Vice Premier Wang Qishan said

But we don't have any inflation in Merica according to Ben Bernank who prints dollars like a drunken sailor

Prof Gulliver's picture

Wrong analogy. Drunken sailors spend money. Ben is simply supplying the drunken sailors with an infinite amount of Bennie Bux.

Re-Discovery's picture

Of course he's spending, how do you think he got that balance sheet.

Ben is spending worse than drunken sailors.  He's sitting at the bar at 4 am ordering more shots hoping a couple of Red Bulls will get him to work in the morning.  Trust me, I've tried it.  Doesn't work.

And the hangover is a BIIITTTTCCCHH!

Fish Gone Bad's picture

That's why they invented methylphenidate.

SokPOTUS's picture

Drunken sailors only spend money until they pass out or run out of money.  We should be so lucky.

Weisbrot's picture

the Ben Bernanke is doing a public service by devaluing (by printing the money) the "public" debt. and by "public" I mean the debt thrown upon us by the korrupt, to prop up their projects that benefit the few and burden the many.

 

insert "quote here"

buzzsaw99's picture

Time for the jasmine-baggers to get uppity again.

chump666's picture

China the biggest number fugger on the planet.  They are going to blow out in 2011.  The BS their numbers and oil goes bid, what idiots.

China's 2011 bust should send oil down, i don't think theywill go into stagflation.  just bust. USD should be bid will stabilize oil price for a little while

Whore_of_Babylon's picture

China no need to worry.  China have lots of US$.  US have lots of dogs no longer can afford.  China want to improve better nutrition.  WIN CHINA. WIN US.

Dr. Engali's picture

I thought they put cat in chinese food..... Wait ,they only put cat in American Chinese food.

StychoKiller's picture

Chinese epithet for being worthless:  "Wolf's heart, dog's lungs!"

What_Me_Worry's picture

“Another slight uptick in inflation is possible by mid- year, but it seems that for inflation, the worst is nearly over for China,” Alaistair Chan, a Sydney-based economist at Moody’s Analytics said before today’s announcement.

Wow.  The sad part is he actually believed what he was saying.

Officials have raised banks’ reserve requirements, reined in credit growth from the record levels of 2009 and 2010, restricted home purchases, and this month fined consumer goods company Unilever 2 million yuan ($300,000) for telling the media that it planned to raise prices.

I am at a loss for words on this one.  I can't even come up with something sarcastic to say.  The only option now is to lie, or say nothing at all.  Zero Hedge could bailout the whole world if they just travel to China and let them levy fines against them.  They must be into the quadrillions of Yuan in truthiness.

slewie the pi-rat's picture

but, alf_e!  don't you know that if there is inflation the banksters and the central planners can always just bring it right under control, with nary an unintended consequece and nothing but white swans, forever, right up there with the freaking unicorns?

HPC Surface Analysis/Radar Loop

this weather map + bong = wwfamine

List of countries by population in 2000 - Wikipedia, the free encyclopedia

GeoHive - Population Statistics

other may prefer the CIA factbook angles.

food is ^^^!!! 

the global slowdown + inflation = china stagflation. 

china is at least honest with the People of the Republic:  we arge to buy gold and silver hand over fist b/c if this fiat shit doesn't work out, you're on your own, and doomed without them. 

damned commie mogambos!!!

 

Coldfire's picture

Statistical bukkake. But I repeat myself.

baby_BLYTHE's picture

Before we put a "limit" on debt/deficits. We need to put a lid on the Bernank (preferably a noose; for committing treason handing out money to foreigners while decent Americans were losing their homes)