Record Chinese Drought Leads To “Crazy” Food Prices
by Tyler Durden
The PBoC may be guilty of many things, but manipulating the weather is not one of them. Yet it is precisely this that is causing the latest surge in various food prices in the mainland, and which will likely force the Chinese central bank to accelerate its tightening regime even more than before. For once the weather can be blamed, only this time, due to an already redhot inflationary indicator, it will have a far broader impact on both domestic and global monetary policy. China Daily reports: “The impacts of China’s worst drought in 50 years have been served up on the nation’s dining tables as the price of rice and vegetables from drought-hit provinces have skyrocketed. The average price of staple foods in 50 cities has increased significantly, and the price of some leaf vegetables has jumped 16 percent in one month, according to data from the National Bureau of Statistics….I didn’t buy many leaf vegetables in the last week because the price is getting crazy,” said Zhang Weirong, a 67-year-old Shanghai resident.” We wish the PBoC the best of luck as it now has to use its futile monetary instruments to neutralize the lack of rain. With the Dragon Boat Festival hoiday between June 4 and 6, we now expect another interest rate hike to be announced in less than a week, in keeping with the central bank’s practice of intervening monetarily during major domestic and international holidays.