Enter today's Marketwatch story reporting that China has frozen energy prices in an attempt to curb soaring prices. "Prices of gasoline, natural gas and electricity shall not be adjusted in the near future, and charges for gas, water, heating and public transport in cities shall not be raised," the Chinese government said in a statement.
The article mentions a few factors compelling China to create price ceilings:
- China's inflation rate hit a new 11-year high of 6.9% in November.
- Food price gains are playing a large role in China's fight with inflation. Pork prices, which leaped 56% from a year earlier, combined with meat and poultry prices rising 38.8%, are real drivers of inflation as a wealthier middle class consumes more meat.
- China hiked interest rates in 2007 six times and also increased banks' reserve requirement ratios 10 times.
Zack Miller is the Managing Editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund.
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