Inflation Starts Here — or There

A very slow economic recovery in the U.S., and the associated headache of continuing high unemployment have generally kept inflation at bay over the last year. However, the recent spike in fuel prices and in some commodity categories have been warning us that the buyer’s market may be coming to an end.

Where will inflation start? It already has, of course, in most forms of transportation. The New York Times says in this article that you can add China to that list.

According to the Times‘ data, minimum wages in Beijing have gone up about 20% in the last year when calculated in terms of U.S. dollars — partly due to local  pressure and partly due to the rise in value of the renminbi. Overall the official inflation rate is listed as just 5%, although that is likely to be a low estimate.

This news brings more caution about sourcing in China — although the real key to success there has never been to race in, hoping for a quick fix to cut costs. And it’s a reminder to check every category you are buying for advance signs of price pressure.


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