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

    Republicans Struggle With Reality of Trump Nomination

    Despite calls for unity by presumptive presidential nominee, analysts see inevitable fragmentation of party ahead of November election and beyond

    Nielsen's, Sina Weibo Team Up for Closer Look at Chinese Social Media

    US-based rating agency reaches deal with China's Twitter-like service to gauge marketing effectiveness on platform which has more than 200 million users

    Despite Cease-fire, Myanmar Landmine Scourge Goes Unaddressed

    Myanmar has third-highest mine casualty rate in the world, according to Landmine and Cluster Munition Monitor, which says between 1999 to 2014 it recorded 3,745 casualties, 396 of whom died

    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.
    Press Freedom in Myanmar Fragile, Limitedi
    X
    Katie Arnold
    May 04, 2016 12:31 PM
    As Myanmar begins a new era with a democratically elected government, many issues of the past confront the new leadership. Among them is press freedom in a country where journalists have been routinely harassed or jailed.
    Video

    Video Press Freedom in Myanmar Fragile, Limited

    As Myanmar begins a new era with a democratically elected government, many issues of the past confront the new leadership. Among them is press freedom in a country where journalists have been routinely harassed or jailed.
    Video

    Video Taliban Threats Force Messi Fan to Leave Afghanistan

    A young Afghan boy, who recently received autographed shirts and a football from his soccer hero Lionel Messi, has fled his country due to safety concerns. He and his family are now taking refuge in neighboring Pakistan. VOA's Ayaz Gul reports from Islamabad.
    Video

    Video Major Rubbish Burning Experiment Captures Destructive Greenhouse Gases

    The world’s first test to capture environmentally harmful carbon dioxide gases from the fumes of burning rubbish took place recently in Oslo, Norway. The successful experiment at the city's main incinerator plant, showcased a method for capturing most of the carbon dioxide. VOA’s Deborah Block has more.
    Video

    Video EU Visa Block Threatens To Derail EU-Turkey Migrant Deal

    Turkish citizens could soon benefit from visa-free travel to Europe as part of the recent deal between the EU and Ankara to stem the flow of refugees. In return, Turkey has pledged to keep the migrants on Turkish soil and crack down on those who are smuggling them. Brussels is set to publish its latest progress report Wednesday — but as Henry Ridgwell reports from London, many EU lawmakers are threatening to veto the deal over human rights concerns.
    Video

    Video Tensions Rising Ahead of South China Sea Ruling

    As the Philippines awaits an international arbitration ruling on a challenge to China's claims to nearly all of the South China Sea, it is already becoming clear that regardless of which way the decision goes, the dispute is intensifying. VOA’s Bill Ide has more from Beijing.
    Video

    Video Painting Captures President Lincoln Assassination Aftermath

    A newly restored painting captures the moments following President Abraham Lincoln’s assassination in 1865. It was recently unveiled at Ford’s Theatre in Washington, where America’s 16th president was shot. It is the only known painting by an eyewitness that captures the horror of that fateful night. VOA’s Julie Taboh tells us more about the painting and what it took to restore it to its original condition.
    Video

    Video Elephant Summit Results in $5M in Pledges, Presidential Support

    Attended and supported by three African presidents, a three-day anti-poaching summit has concluded in Kenya, resulting in $5 million in pledges and a united message to the world that elephants are worth more alive than dead. The summit culminated at the Nairobi National Park with the largest ivory burn in history. VOA’s Jill Craig attended the summit and has this report about the outcomes.
    Video

    Video Displaced By War, Syrian Artist Finds Inspiration Abroad

    Saudi-born Syrian painter Mohammad Zaza is among the millions who fled their home for an uncertain future after Syria's civil war broke out. Since fleeing Syria, Zaza has lived in Lebanon, Egypt, Jordan and now Turkey where his latest exhibition, “Earth is Blue like an Orange,” opened in Istanbul. He spoke with VOA about how being displaced by the Syrian civil war has affected the country's artists.
    Video

    Video Ethiopia’s Drought Takes Toll on Children

    Ethiopia is dealing with its worst drought in decades, thanks to El Nino weather patterns. An estimated 10 million people urgently need food aid. Six million of them are children, whose development may be compromised without sufficient help, Marthe van der Wolf reports for VOA from the Metahara district.
    Video

    Video Little Havana - a Slice of Cuban Culture in Florida

    Hispanic culture permeates everything in Miami’s Little Havana area: elderly men playing dominoes as they discuss politics, cigar rollers deep at work, or Cuban exiles talking with presidential candidates at a Cuban coffee window. With the recent rapprochement between Cuba and United States, one can only expect stronger ties between South Florida and Cuba.
    Video

    Video California Republicans Weigh Presidential Choices Amid Protests

    Republican presidential candidates have been wooing local party leaders in California, a state that could be decisive in selecting the party's nominee for U.S. president. VOA's Mike O’Sullivan reports delegates to the California party convention have been evaluating choices, while front-runner Donald Trump drew hundreds of raucous protesters Friday.
    Video

    Video ‘The Lights of Africa’ - Through the Eyes of 54 Artists

    An exhibition bringing together the work of 54 African artists, one from each country, is touring the continent after debuting at COP21 in Paris. Called "Lumières d'Afrique," the show centers on access to electricity and, more figuratively, ideas that enlighten. Emilie Iob reports from Abidjan, the exhibition's first stop.

    Special Report

    Adrift The Invisible African Diaspora