Yesterday for the first time I attended the Bird’s nest and the Olympic complex. It is beautifully designed, well laid out, and very easy to maneuver. I hope that they leave everything open after the Olympics, although it is hard to know what kind of events can draw the kinds of crowds in Beijing needed to keep the Bird’s Nest even partially filled. It is truly huge. Of course I was hoping for an American win in the 200-meter race, the most important event of the day for me (and for most of the audience, judging from the sound) but it was hard not to root for Jamaica’s Usain Bolt, who put on an amazing performance.
One criticism I have is that I couldn’t find any even marginally edible food at the stadium. Still, perhaps food is becoming a luxury. Food inflation may be stabilizing, according to the CPI index, but beginning Monday, KFC, one of the most popular fast food outlets in China, is raising its prices for the second time this year. The first time was in March, and from what I can make out from the People’s Daily article reporting the increase, this time around price increases are larger than last time. Referring to a statement from Xu Hui, KFC’s PR spokesman, the article says:
The price increase, which came into effect on Monday, ranges from 0.5 yuan to 2.5 yuan for different items on the food giant's menu, said Xu Hui, KFC's public affairs director. "The prices of all burgers have gone up by 0.5 yuan, and the price for medium coke has risen to 6.5 yuan from 6 yuan," a KFC employee working in the outlet on the Middle Huaihai Road in Shanghai said. Prices of six types of burger sets increased by between 1.5 yuan and 2.5 yuan.
Xu blamed the soaring prices of fossil and edible oil, increasing costs of labor and electric fees for the latest rise in prices. This is the second time that KFC has increased its prices in China this year. Items on its menu rose from between 0.5 yuan and 1.5 in March. "The price increases are inevitable based on the rising food and commodity prices, and no company will be able to absorb the price on a long-term basis," said Ashok Sethi, regional director of UK-based market research company TNS.
With the exception of the 8.3% rise in the medium coke, there isn’t enough information here (and I don’t know enough about KFC prices) to figure out average percentage increases. By the way McDonald’s also raised their prices twice this year, the last time in June.
It is not just the fast food giants who are raising prices. According to a report in today’s Emerging Markets Economics Daily (put out by Dong Tao of Credit Suisse), growth in wholesale prices for July moderated slightly from June’s 9.5%, but remained high at 9.4%. Food price rises declined year on year but they were more or less matched by higher price rises in crude oil, oil products, and electricity. Don’t forget that with price controls all of these price rises, including for food, are probably understated.
Investors might not have been paying much attention to the KFC price hike, but they were worried nonetheless about inflation today. Rising oil prices undermined hopes for inflation relief, while doubts emerged about the reported major economic stimulus package, causing the market to give back nearly half of yesterday’s 7.6% surge. The SSE Composite closed at 2433, down 3.5% for the day.
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