Rising prices test all countries around the world - Wulin Blog Network

Currently, whether it is a developing country or a developed one, all are facing the problem of curbing price hikes.

According to data published by Brazil's National Institute of Geography and Statistics, Brazil's inflation rate last year reached 4.46%, an increase of 1.32 percentage points compared to 2006. The price increase for food and beverages reached 10.79%. According to statistics published by the Argentine government, Argentina's inflation rate in 2007 was around 9%, while some economists believe that Argentina's actual inflation rate last year was between 15% and 20%.

Russia's inflation rate in 2007 was 11.9%, exceeding the government's original goal of controlling it at 8%. Food prices increased by 15.6%.

In 2007, the US inflation rate reached 4.1%, an increase of 1.6 percentage points compared to 2006. The rise in food prices was 5%.

The Eurozone's consumer price increase in January this year was 3.2%, breaking the European Central Bank's target of 2%.

Senior researcher Truman from the Peterson Institute for International Economics analyzed that the world economy has experienced rapid growth for four to five years already, bringing pressure on resource supply across the globe. The growth in demand has exceeded the growth in supply, and excess capacity has also been utilized, so the inflation rate is gradually increasing everywhere.

Food price increases lead the way

In this round of price increases, the increase in food prices is clearly leading, with the rise in grain costs playing an indispensable role. According to the US Department of Agriculture's agricultural products supply and demand forecast report, the US wheat carryover inventory for the 2007/08 season is expected to reach its lowest point in 60 years. The US is the world's largest wheat exporter. Last year, wheat producing countries such as Canada, Argentina, and Australia suffered from natural disasters like droughts or frost, affecting production, while countries such as Russia, Kazakhstan, and Argentina imposed restrictions on wheat exports to prioritize domestic needs. In February, the UN Food and Agriculture Organization released a report predicting that global grain inventories would drop to their lowest point since 1982.

In recent years, many developing countries have experienced rapid economic development, improving residents' dietary structures, consuming more grains in the production of meat, eggs, and milk. Since 2007, the Chicago Futures Exchange's agricultural futures have seen a rare bull market trend, with wheat and soybean futures prices doubling within a year.

At the same time, under the backdrop of high oil prices, the US government has strongly promoted biofuel plans. According to estimates by the US Department of Agriculture, in the coming few years, one-third of the US corn production will be used for ethanol fuel production, whereas in 2002, this proportion was only 11%. A report issued by the Commodity Evaluation Coordinating Committee under the US Department of Agriculture stated that due to the large use of corn for ethanol fuel production, the US corn carryover inventory for the 2008/09 season will decrease by 13.6% compared to the previous season.

Speculative funds exacerbate the situation

Since the start of 2008, Wall Street stocks have almost daily been surrounded by negative news such as financial institution asset write-downs, operating losses, and weak US economic data, leaving market sentiment quite low. The profit-seeking nature of capital determines that it will seek new battlegrounds, and the commodity markets, which were previously "value troughs," will eventually be filled.

The Federal Reserve's recent continuous interest rate cuts have prompted the dollar exchange rate to keep falling. Agricultural futures on the Chicago Futures Exchange are all priced in dollars, and the depreciation of the dollar has stimulated speculative funds' enthusiasm for market speculation. Speculators have pushed agricultural futures markets to extremes. Taking wheat futures as an example, at the Minneapolis Grain Exchange, starting from January 31st, the March delivery spring wheat contract saw continuous price increases for 11 trading days, driving up related agricultural futures such as soybeans and corn.

Chicago Mercantile Exchange lifetime chairman and "father of financial futures" Melamed said that speculation is the result of loose monetary policy. It's not excessive speculation, but rather excessive money supply. Clearly, Melamed attributes the fault to the Federal Reserve. Since the second half of 2007, the Federal Reserve, in response to the subprime crisis and to prevent economic recession, has temporarily set aside its inflation target, cutting interest rates six times, reducing the federal funds rate from 5.25% to the current 2.25%.

Senior researcher Steel from the New York Council on Foreign Relations believes that since some countries in the Middle East and East Asia still essentially adopt policies pegged to the dollar, the Federal Reserve's overly loose interest rate policy will expand the scope of inflation. He believes that the US's loose monetary policy is exporting inflation abroad. If this situation gets out of control, it could harm the dollar's status as a long-term reserve currency.

▲ Myanmar's energy sector began significantly increasing energy product prices from mid-August last year, leading to widespread price hikes, causing dissatisfaction among citizens and monks. Capital cities like Yangon witnessed consecutive days of large-scale protest marches.