When inflation starts to kill people then it is a serious problem. Three people died and 31 were injured on Saturday in a stampede to buy cut-price cooking oil in the western Chinese city of Chongqing. China can no longer explain away inflation as a short-term result of floods and epidemics of animal disease—nor can it ignore the strains its macroeconomic policies are producing. Cooking oil is a special case—its price influenced by demand from China’s glut of new biofuel refineries—but the broader price of food has risen in recent months by more than 15 percent compared with a year earlier. Floods and other acts of God have had their effect, as has the global rise in wheat prices, but there are structural forces at work as well. Nor is inflation confined to food any longer: producer prices are creeping up. The PPI2 for manufactured goods was up 3.2 percent in October—many steel products rose by more than 10 percent—and the PPI is likely to go even higher when the recent 10 percent hike in the controlled pump price of diesel feeds through. Given the likelihood that more state-controlled prices will have to rise, and given that the official inflation data do not properly capture important prices, such as the cost of education, the real situation may be even worse. That is a worry for the rest of the world, used to enjoying the "China price", a seemingly open-ended deflationary pressure on the world economy. The surge in Chinese inflation since June has barely fed through into export prices yet—bat it will. China’s currency has also been gently appreciating, but so far improvements in productivity have meant that Chinese manufacturers have not needed to raise export prices. If currency appreciation speeds up, that will change. The renminbi may have to rise faster because the tools that China is using to tackle inflation have not worked. Bank reserve requirements were biked again over the weekend, to 13.5 percent, but the strain on the banking sector’s profitability will start to tell. Interest rates have risen repeatedly, but with CPI3 inflation above 6 percent, and benchmark lending rates only slightly higher, real interest rates are low. There must now be a low, but non-zero, probability that China opts for a one-off revaluation of the renminbi in order to ease its domestic monetary problems. That would be the right move. The adjustment would be easier both for China and for the rest of the world if the renminbi had not been kept so low for so long. But the pain of unwinding global imbalances will only get worse the longer they are left. 注释：2PPI工业品出厂价格3CPI消费物价指数