News / Asia

Inflation in Asia Reflects Rising Incomes, Falling Crop Production

An Indian worker carries a sack of onions at a wholesale market in Hyderabad, India, Jan 22, 2011
An Indian worker carries a sack of onions at a wholesale market in Hyderabad, India, Jan 22, 2011

Multimedia

Brian Padden

Rising inflation in Asia has sparked concern that it could stifle economic growth in the region and the world.

At a market in Jakarta the price of red chili peppers is almost double what it was last year. The increase causes concern here since peppers are a key ingredient in almost every Indonesian meal. But some consumers, like Jarwati, say they are adjusting.
She says people who used to buy one kilo now only buy half a kilo. People who buy 250 grams, now they only buy 100 grams.

Food prices are rising in much of Asia. Global prices for oil, iron, coal and other commodities also are rising.

And in China property values are skyrocketing. Mr. Zhu owns an old apartment building in Beijing where units sell for 43,000 yuan per square meter, the equivalent of $6,500.

He says the biggest change has definitely been price. It used to be a few thousand yuan per square meter, or even a few hundred, to now tens and hundreds of thousands.

The small, one-bedroom apartments in his building are now selling for more than $350,000 each and are usually sold very quickly.

Some economists worry that inflation could erode the purchasing power of Asia’s emerging middle class.  But securities analyst Nicholas Cashmore says in some Asian countries inflation reflects a rise in incomes and economic growth.

"There's a lot of countries I think in the world today that would like inflation," said Cashmore.  "A modest inflation is always good because it represents that there is demand. And it represents a growing economy."

He says in some Asian countries, like Indonesia, incomes have risen sharply in the past five years. These growing economies, he says, can handle an inflation rate of up to 5 percent. However, in some countries, including Indonesia, inflation now tops 6 percent a year.

And even in countries with robust growth, such as Indonesia, India and China, rising food prices impose hardships. Nagesh Kumar is the chief economist for the United Nations Economic and Social Commission for Asia and the Pacific.  He says in Asia, 980 million people live on less than $1.25 a day, and most of their incomes go to food.

"For them it means much more hardship, and then much lesser nutrition," said Kumar.  "And some of the people who are just above the poverty line, because of rising food prices, they may also be pushed into poverty.  So the result would be that under-nutrition, malnutrition increasing, and that leading to some health problems later on. So, this is a very serious problem for many Asian economies, especially in South Asian economies."

In developed countries, such as South Korea, food accounts for a relatively small percentage of a household budget. But even for them, inflation creates political and economic headaches, which Kumar says governments will try to control. He says that could slow Asia’s strong recovery from the global financial crisis.

"In 2010 they [Asian economies] recover rather well from the crisis," added Kumar.  "But now, central banks everywhere, you see that there is a trend that they are raising policy rates to curb the money supply. And that process is likely to affect the growth momentum."

In recent months, central banks in China, Indonesia and elsewhere have raised interest rates to try to slow price increases.

Rising commodity and energy prices mean more factories are producing more goods, which means there is economic growth in Asia and the world. But, Kumar notes, with crop failures in several parts of the world and falling investment in agriculture in much of Asia, food inflation may lead to suffering for many people and more problems for governments.

You May Like

Changing Under Pressure, IS ‘Potent’ as Ever

US intel officials describe Ramadi's fall as concerning, but say it isn't emblematic of larger effort to degrade IS capabilities More

Nigeria Fuel Shortage Shows Fragility of Africa’s Oil Giant

Although it is the largest oil producer in Africa, country has nearly ran out of fuel it needs to power its generators, cars and airplanes over the past week More

Arrested Football Officials Come Mainly From the Americas

US Justice Department alleges defendants participated in 24-year scheme to enrich themselves through corruption of international soccer More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
3D Printer Makes Replica of Iconic Sports Cari
|| 0:00:00
...    
🔇
X
George Putic
May 27, 2015 9:31 PM
Cars with parts made by 3D printers are already on the road, but engineers are still learning about this new technology. While testing the possibility of printing an entire car, researchers at the U.S. Department of Energy recently created an electric-powered replica of an iconic sports roadster. VOA’s George Putic has more.
Video

Video 3D Printer Makes Replica of Iconic Sports Car

Cars with parts made by 3D printers are already on the road, but engineers are still learning about this new technology. While testing the possibility of printing an entire car, researchers at the U.S. Department of Energy recently created an electric-powered replica of an iconic sports roadster. VOA’s George Putic has more.
Video

Video US Voters Seek Answers From Presidential Candidates on IS Gains

The growth of the Islamic State militant group in Iraq and Syria comes as the 2016 U.S. presidential campaign kicks off in the Midwest state of Iowa.   As VOA’s Kane Farabaugh reports, voters want to know how the candidates would handle recent militant gains in the Middle East.
Video

Video A Small Oasis on Kabul's Outskirts Provides Relief From Security Tensions

When people in Kabul want to get away from the city and relax, many choose Qargha Lake, a small resort on the outskirts of Kabul. Ayesha Tanzeem visited and talked with people about the precious oasis.
Video

Video Film Festival Looks at Indigenous Peoples, Culture Conflict

A recent Los Angeles film festival highlighted the plight of people caught between two cultures. Mike O'Sullivan has more on the the Garifuna International Film Festival, a Los Angeles forum created by a woman from Central America who wants the world to know more about her culture.
Video

Video Kenyans Lament Losing Sons to al-Shabab

There is agony, fear and lost hope in the Kenyan town of Isiolo, a key target of a new al-Shabab recruitment drive. VOA's Mohammed Yusuf visits Isiolo to speak with families and at least one man who says he was a recruiter.
Video

Video Scientists Say Plankton More Important Than Previously Thought

Tiny ocean creatures called plankton are mostly thought of as food for whales and other large marine animals, but a four-year global study discovered, among other things, that plankton are a major source of oxygen on our planet. VOA’s George Putic reports.
Video

Video US-led Coalition Gives Some Weapons to Iraqi Troops

In a video released Tuesday from the Iraqi Ministry of Defense, Iraqi forces and U.S.-led coalition troops survey a cache of weapons supplied to help Iraq liberate Mosul from Islamic State group. According to a statement provided with the video, the ministry and the U.S.-led coaltion troops have started ''supplying the 16th army division with medium and light weapons in preparation to liberate Mosul and nearby areas from Da'esh (Arabic acronym for Islamic State group).''
Video

Video Amnesty International: 'Overwhelming Evidence' of War Crimes in Ukraine

Human rights group Amnesty International says there is overwhelming evidence of ongoing war crimes in Ukraine, despite a tentative cease-fire with pro-Russian rebels. Researchers interviewed more than 30 prisoners from both sides of the conflict and all but one said they were tortured. Henry Ridgwell reports for VOA from London.
Video

Video Washington Parade Honors Those Killed Serving in US Military

Every year, on the last Monday in the month of May, millions of Americans honor the memories of those killed while serving in the armed forces. Memorial Day is a tradition that dates back to the 19th Century. While many people celebrate the federal holiday with a barbecue and a day off from work, for those who’ve served in the military, it’s a special day to remember those who made the ultimate sacrifice. Arash Arabasadi reports for VOA from Washington.
Video

Video Kenya’s Capital Sees Rise in Shisha Parlors

In Kenya, the smoking of shisha, a type of flavored tobacco, is the latest craze. Patrons are flocking to shisha parlors to smoke and socialize. But the practice can be addictive and harmful, though many dabblers may not realize the dangers, according to a new review. Lenny Ruvaga has more on the story for VOA from Nairobi, Kenya.
Video

Video Rolling Thunder Run Reveals Changed Attitudes Towards Vietnam War

For many US war veterans, the Memorial Day holiday is an opportunity to look back at a divisive conflict in the nation’s history and to remember those who did not make it home.
Video

Video Female American Soldiers: Healing Through Filmmaking

According to the United States Defense Department, there are more than 200-thousand women serving in the U.S. Armed Forces.  Like their male counterparts, females have experiences that can be very traumatic.  VOA's Bernard Shusman tells us about a program that is helping some American women in the military heal through filmmaking.

VOA Blogs