Food to drive inflation above target

• Published 03 Jun 2010

Speculative capital flowing into a range of agricultural products and falling output following a run of bad weather is set to continue driving up food prices.

China is paying a steep price for the record amount of money it pumped into the economy last year to stay afloat during the financial crisis. Too much money is now chasing too few goods as bad weather slashes farm output and attracts speculative capital into a range of agricultural products. This, coupled with the rising cost of production and growing demand has led to a spike in crop prices, intensifying inflationary pressures.

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