According to two economists interviewed by the South China Morning Post – Hong Kong’s newspaper (subscription req’d) – inflation in mainland China is expected to remain relatively docile in 2013.
HSBC’s Donna Kwok projects 3.1% inflation, while Hong Kong based UBS chief economist Wang Tao has it pinned a bit higher at 3.5%. Of course these are projections on the reported numbers, which must be taken with a grain of salt (as do the US numbers!)
Net-net they expect cautious easing by the Chinese government, but think that these inflation expectations are too high to allow for another 2009-level “shock and awe” easing performance in China.
We’ll be keeping a close eye on soft commodity prices this year – if China is successful in re-goosing their economy, I would anticipate this will initially be reflected in commodity prices, especially food. Most of the softs – cotton, coffee, and sugar to name a few – are trading near two-year lows at the moment.
King Cotton has been showing some signs of late – buoyed by rumors that China can’t find enough cotton. (via BarChart.com)