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

Video Video Claims to Show Shi'ite Forces in Iraq Executing Sunni Boy

While not yet independently confirmed, brutal killing already has gotten attention of Islamic State followers on social media More

After Six Years, Little Change for Niger Delta's Former Militants

Nigerians who laid down arms in exchange for government amnesty subsidies fear program may end with upcoming presidential elections More

Vietnam Pushes for More Educated Drivers to Curb Road Deaths

Transportation officials hope that making a greater effort to get drivers to learn the rules of the road will reduce fatal crashes 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.
Video Claims to Show Shia Forces in Iraq Executing Sunni Boyi
X
Jeff Seldin
March 05, 2015 2:36 AM
A graphic mobile phone video is spreading on the Internet, claiming to show Iraqi forces or Shia militia executing a handcuffed Sunni boy. Experts have yet to verify the video, but already Islamic State followers are publicizing it across social media, playing on deep-rooted sectarian fears. VOA’s Jeff Seldin reports.
Video

Video Video Claims to Show Shia Forces in Iraq Executing Sunni Boy

A graphic mobile phone video is spreading on the Internet, claiming to show Iraqi forces or Shia militia executing a handcuffed Sunni boy. Experts have yet to verify the video, but already Islamic State followers are publicizing it across social media, playing on deep-rooted sectarian fears. VOA’s Jeff Seldin reports.
Video

Video Ukrainian Authorities Struggle to Secure a Divided Mariupol

Since last month's cease-fire went into effect, shelling around the port city of Mariupol has decreased, but it is thought pro-Russian separatists remain poised to attack. For the city’s authorities, a major challenge is gaining the trust of residents, while at the same time rooting out informants who are passing sensitive information to the rebels. Patrick Wells reports for VOA.
Video

Video Volunteer Gauge-Watchers Help Fine-Tune Weather Science

An observation system called CoCoRaHS is working to improve weather science, thanks to thousands of volunteers across the country who measure precipitation in their own backyards, then share their data through the Internet. VOA's Shelley Schlender reports.
Video

Video NASA Spacecraft Approaches a Dwarf Planet

NASA’s Dawn spacecraft will make history on Friday, March 6, when it becomes the first man-made object to orbit a dwarf planet named Ceres. It is located in the asteroid belt between Mars and Jupiter, almost 500 million kilometers from Earth. Among other objectives, Dawn will try to examine two mysterious bright white spots detected on the planet’s surface. VOA’s George Putic has more.
Video

Video Young Muslims Radicalized Online

Young Muslims are being radicalized ‘in their bedrooms’ through direct contact with Islamic State or ISIL fighters via the Internet, according to terror experts. There are growing concerns that authorities and Internet providers are not doing enough to counter online extremism - which analysts say is spread by a prolific network of online supporters around the world. Henry Ridgwell reports from London.
Video

Video African Americans Recall 1960's Fight For Voting Rights

U.S. President Barack Obama and thousands of people will gather in the small southern U.S. city of Selma, Alabama, Saturday, March 7th to commemorate the 50th anniversary of a historic voting rights march that became known as “Bloody Sunday." VOA’s Chris Simkins traveled to Alabama and introduces us to some of the foot soldiers of the voting rights struggles of the 1960’s.
Video

Video Positive Messaging Transforms Ethiopia's Image

Ethiopia was once known for famine and droughts. Now, headlines more often point to its fast-growing economy and its emergence as a regional peacemaker. How has Addis Ababa changed the narrative? VOA's Marthe van der Wolf reports.
Video

Video Cyber War Rages Between Iran, US

A newly published report indicates Iran and the United States have increased their cyber attacks on each other, even as their top diplomats are working toward an agreement to guarantee Iran does not develop a nuclear weapon and to free Iran from international sanctions. The development is part of a growing global trend. VOA’s Al Pessin reports from London.
Video

Video Answers Elude Families of MH370 Passengers

For the families on board Malaysia Airlines flight MH370, an airline official’s statement nearly one year ago that the plane had lost contact with air traffic control at 2:40 AM is the only thing that remains confirmed. William Ide reports.

All About America

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More