Chinese exports won’t stay cheap

China is developing an inflation problem. Consumer prices rose at an annual rate of 6.9% in November, an 11-year high, spurred by an 18.2% jump in the cost of food, thanks to soaring pork prices.

But inflation is spreading beyond food: non-food prices posted their fastest jump this year, to 1.4% from 1.1% in October, as higher petrol and gas costs boosted utility bills; economists reckon this could be the main contributor to inflation next year. "The inflation issue has evolved into more of a macroeconomic problem," said Huang Yiping of Citigroup.

As inflation is creeping up, reflecting the soaring prices of raw materials fuelling the economic boom, it will head west; cheaply manufactured goods that have helped keep a lid on inflation in the developed world "are set to become more expensive", said Damian Reece in The Daily Telegraph.

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China has also hinted that it could now let the yuan appreciate more quickly, noted Richard Spencer in the same paper, which would further raise the price of Chinese goods.

What next?

The news from China highlights the fact that despite slowing growth, central banks have "extremely limited room for manoeuvre", said Jeremy Warner in The Independent. Hopes of further rate cuts in the UK were dealt a blow this week as producer prices hit a 16-year high of 4.5% for November after manufacturers passed on soaring food and energy prices. Food producers charged retailers 6.6% more last month than in the year before, the highest figure since 1993.

The low-inflation growth era of the past 15 years appears to be ending, and 1970s-style inflationary pressures may be in the offing, said Warner. Platform heels could make a comeback before too long.