What Do Garlic, China, Gilligan's Island and Inflation Have In Common?

Four long decades earlier, the word “Ginger” kicked off our boyhood crush memories of the movie starlet Ginger on the hit TV series Gilligan’s Island. Was there anything better to do at 4pm in suburban America after school than watch Gilligan’s Island, not to mention Dark Shadows and F Troop. Homework waited patiently and even our Moms lovingly understood a growing boy’s top priorities in life.

Thirty years later, I moved to China where the word ginger took on new but still daily meaning almost every time I pick up my chopsticks for a meal. Memories of Ginger’s glittering bareback gowns, perfectly out of place on their happy tropic island gave way to that tasty, stringent and healthy Asian root by the same name.

Now, much in accordance with the coming inflation of agriculture foods due to increasing global demand, according to recent reports by Xinhua News, the price of ginger, a high quantity staple in daily cooking here, has jumped 18% in the past month through August 15th.

Similarly, three months ago as reported in the China Daily, garlic prices have sky-rocketed, but the profits have gone into the hands of garlic speculators not the garlic farmers who are too scattered to be organized and demand their share of higher prices.

Inflation’s Leading Indicators

Along with my now famous China’s Extravirgin Olive Inflation Indicator which I first wrote about in 2008, don’t dismiss this news as a leading economic indicator on inflation concerns. “China Rising” is a new reality for the world to reckon with and inflation is a much larger piece of that reality than broad, general government statistics suggest.

The rich and nouveau rich 200 million Chinese have plenty of money and so will barely notice or care much about the inflation that comes with growth, expansion and riches. In fact, to further dazzle your statistic-loving global mind, there are 430,000 millionaires in China today, with 77 new millionaires being added every day according to Steven Bernstein, head of Oppenheimer Funds Asia. The Asian gambling haven, Macau, does triple the revenue of Las Vegas with just a few casinos for players. Indeed, the world of the rich is more and more separate from the rest of world’s economic reality.

Middle Class Paying The Bill

So what about the other one billion Chinese which includes around 400 million lower middle class and 600 million country farmers? As we easily see America’s middle class taking the brunt of the economic punishment from the damage of well known bank and financial industry shenanigans rooted there, these lower income classes in China are also suffering more and more with the price inflation pressure that has arrived and will likely continue for decades to come.

Recent spikes in ginger and garlic price increases follow price increases in staple resources and commodities including chicken, pork, rice, water and electricity here in China. Local service level workers in China do enjoy a very low cost of daily living including ultra-low medical expenses however they typically have equally low salaries of 1500rmb to 3000rmb per month (USD $250 to $400).

So the world watches the new reality of China where progress and expansion and inflation march along hand in hand; where the cost of a street-side dinner plate of rice with freshly tossed veggies and chicken, sautéed as usual with slices of ginger and garlic, goes from $2 to $2.50, and where it goes down a lot harder in the real world. Staple commodity inflation is upon us and this is perhaps the only where we could suggest; at least it still tastes good.

Mario Cavolo
Shanghai

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