Instant (Noodle) Inflation

How hot is inflation running in China? Fast enough that store clerks at my local convenience store don’t bother to replace the computer-generated price tags for instant noodles at a nearby convenience store. They just cross them out and write in the new (substantially higher) ones. Below, three impromptu price hikes on three well-known brands of instant noodles – low, medium, and “premium” priced.

[UPDATE: Though the size of the increase is obvious, the value – for those outside of China – is not. So, for you folks, keep in mind that the conversion rate this morning is US$1 = RMB 6.61. And that means the value of the cheapest brand, up top, has gone from US$.41, to US$.45. The rest of the math, dear reader, is up to you.]

For those outside of China, you may be asking: why instant noodles?

Well. I once had an argument with a friend from Beijing about what, truly, is China’s modern staple food: the instant noodle, or the bowl of rice. We couldn’t come to agreement on that question, though we did, in time, agree that the disposable paper instant noodle bowl is a far more apt symbol of Chinese job security in the 21st century, than the iron rice bowl of Mao’s day (ie, today’s modern Chinese job seeker wants a disposable instant noodle bowl to sustain his/her family until the next disposable instant noodle bowl[®]). Point being: Chinese people eat lots of instant noodles, and thus the Party has long taken a keen interest in keeping the price of instant noodles stable. Thus, in 2007, in a country where price-fixing is as common as instant noodles, and mostly tolerated, the powerful National Development and Reform Commission went after instant noodle manufactures for, yes, price fixing (an excellent WSJ report on that episode here). Chinese inflation was running hot in 2007, and it’s running even hotter now and, as a result, it’s time to smack around the instant noodle makers again. This time, though, it’s the retailers doing the smacking: French hypermarket operator Carrefour is in the midst of a stare down with the Mainland’s most popular instant noodle manufacturer over price hikes due to rising raw material costs.

For more on rising wages among people who actually work with raw materials (and, presumably, eat instant noodles), see this recent Shanghai Scrap post.

4 thoughts on “Instant (Noodle) Inflation

  1. Thanks for this. For all of the facts and figures out there it’s nice to see some actual Chinese “inflation in action.” There’s too much reporting of stats and not enough reporting what’s going on in the actual markets. I need that data! I know Patrick Chovanec has his so-called KFC index but that always struck me as the lame construction of a foreigner who doesn’t speak or know anything about China. So he goes to a Western restaurant to find his inflation numbers. This post, at least, speaks to the real market. So thanks.

  2. “I need that data!” The Shanghai news programs daily report the price fluctuations on a large variety of common foodstuffs by a data strip going by on the bottom of the tv screen along with exchange rates and other topics of consumer interest, and price increases are a topic commented upon almost daily by the networks and reported in the newspapers. There is no mystery about this and KFC – which is holding prices – is not a reliable indice.

  3. Sorry Scott but not all of us have access to that Shanghai data. I’m in London with all of the money I want to spend on data, and I can’t get that kind of thing. For my purposes this is terrific.

  4. That in the year 2011 daily information recounted by the news media in China remains a closed book to certain analysts in say, London or Boston, does leave me gobsmacked.

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