India inflation 8.9%
India's inflation rate rose to 8.9% from 8.3% in February 2011, driven higher by fuel and manufacturing costs, their government announced.
The Reserve Bank of India has raised its key interest rate eight times since March 2010. The rate is now 6.75%. There is talk of another rise, to dampen inflation. Inflation approaching 10% should be a concern for our own economy - partly because it increases our own input costs when we buy from India, partly because their inflation reflects rising commodity costs which also pushes up our costs, and partly because the cheap labour which we 'imported' from these developing economies is being eroded, a signal (if it continues) that the decades-long deflation we have enjoyed from their labour is ending. Once this "one-off" "once-in-a-generation" deflationary factor disappears from our costs, we can expect those costs to climb.
In that other developing (developed?) economy - China - they reported today that consumer prices rose by 5.4% in March compared with a year earlier. Last month the annual figure was 4.9%.
On a more local note UK factory input prices rose nearly 15% in the year to March 2011. Margin squeeze (in what's left of our industry) anyone?
The Reserve Bank of India has raised its key interest rate eight times since March 2010. The rate is now 6.75%. There is talk of another rise, to dampen inflation. Inflation approaching 10% should be a concern for our own economy - partly because it increases our own input costs when we buy from India, partly because their inflation reflects rising commodity costs which also pushes up our costs, and partly because the cheap labour which we 'imported' from these developing economies is being eroded, a signal (if it continues) that the decades-long deflation we have enjoyed from their labour is ending. Once this "one-off" "once-in-a-generation" deflationary factor disappears from our costs, we can expect those costs to climb.
In that other developing (developed?) economy - China - they reported today that consumer prices rose by 5.4% in March compared with a year earlier. Last month the annual figure was 4.9%.
On a more local note UK factory input prices rose nearly 15% in the year to March 2011. Margin squeeze (in what's left of our industry) anyone?
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