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Inflation, inflation, inflation

Inflation, inflation, inflation
Inflation has risen 3.2% over the last year in the U.S., mostly because of increased food and gas prices. This is the biggest 12 month increase since October 2008.  The number comes from the Consumer Price Index (CPI), the most widely used measure of inflation.

While this may seem like a lot, inflation is even higher in emerging economies such as Brazil, Russia, India and China (BRIC).  Paul Krugman of The New York Times argues that increased investment in these booming economies is the reason for much of the inflation, but that the “underlying inflation in the wealthy nations remains low.” Krugman writes of the BRIC countries, “China and India grew more than 10 percent last year, Brazil more than 7 percent. These economies are overheating, and inflation is the natural result.”

Much of the inflation in these developing economies comes from increasing demand for oil and for other raw materials such as copper, cotton, and steel.  But this is also affecting the United States, where almost half of the month to month increases in the Consumer Price Index comes from gasoline.  In addition to the growing demand from emerging economies, unrest in North Africa and the Middle East is also increasing the price of oil.

While inflation does mean development for the BRIC countries, it can also be hazardous for the country’s poor, who cannot afford spikes in basic food prices.  In India, “food inflation has been running more than 10 percent in the past year.” It crossed 18 percent in December 2010, when prices of Indian staples such as onions and tomatoes spiked.  Runaway food inflation such as in India can mean hunger for those who can no longer afford basic staples, and is tempering the optimism Indians have in their economic growth story.



Rishi Sidhu

Rishi Sidhu is a freelance writer and journalist based in Boston, Massachusetts. He found his love for international relations while teaching English on the Japan Exchange and Teaching program in the rural town of Agematsu in Nagano prefecture. After 2 years in Japan, Rishi traveled to India to study Hindi and pursue his journalism career. He became interested in food security when he first heard people in India complaining about rising food prices and loves the issue because of its impact on all aspects of human society; from health to politics, from environmentalism to global development.