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AIDI MAC DÁIBHÍ: How inflation is driving the housing crisis

China

So here we are heading into July 2021 and much of our Irish summer so far has been dismal.  I gave up on hope for our Irish weather and built myself a greenhouse. Today I was planting my tomatoes as I thought about China and grumbled about the price of wood to build said greenhouse.

Not a lot of people are aware that China has a grain shortage, and that the Chinese government are scrambling to keep a lid on this, for two reasons. 1, to stop a domestic panic about supply, and 2, keep it quiet so that the price for imported grains does not skyrocket. Currently they are importing on a massive scale before the world finds out.

You probably see where I’m going with this but just in case, I’ll spell it out in two words. Food inflation. Right now the Chinese are being very strict on going out and telling the world there are no problems. Just like the early days of the Wuhan thingy, this is going to grow into something big. As far as I know, no mainstream media outlet is reporting on it. China just does not have enough grains particularly corn which is vital for China’s immense pig, cow and poultry farming. So sit back and grab the popcorn. Oh, wait there won’t be any, and if there is, come autumn, it will be pricy.

Now you may be thinking that this is probably due to bad Chinese weather and lacklustre harvests but in fact the seed (pun intended) of this problem started about five years ago when China dismantled a scheme that provided farmers with higher than market prices for corn. Farmers have had no incentive to grow it since, and has each year produced less of this grain than it consumes. A great thing for Australia who have sold 25 million more tons of grain to China than they usually do.

Construction prices

When I bought the wood to build my greenhouse it was so expensive that the builders supply physically winced when he gave me the quote. I thought about giving up, but I had my heart set on it so I went ahead and bought the materials anyway. Which leads me to the housing market and if these high prices would destroy new construction in Ireland? I thought about whether inflation is here or maybe high prices were temporary shocks that would ease as our economy moved away from the world longest Irish lockdown? Now the word on the street is that wood prices are tumbling. If only I had waited a month! However, a little research shows that wood is almost three times what is normal for this time of year. That’s not worrying at all.

Inflation

So is inflation happening? Best to ask Deutsche Bank and not me as I think there is a global food shortage coming. Maybe building the greenhouse is becoming a little more attractive.  But back to the question at hand – The Deutsche Bank team said recently that, “the coming inflation will resemble the 1970s experience, (a decade during which Irish inflation averaged nearly 13% and was at 20.88% in 1975). Soaring food and energy prices helped push that era’s soaring inflation.”

Here are two reasons to build a greenhouse before flu season starts – Because health authorities worldwide have said we are in for a doozy as no-one got the flu last season. This will effect supply and you won’t get your lettuce. (I don’t believe for a minute that no one got the flu last season – but food shortages and higher prices are coming anyway). Prices of building supplies are three times higher than they normally should be but come late Autumn they will be even higher (this will put you off building a greenhouse or a new home for that matter)

 


Aidi Mac Dáibhí lives in Listowel , County Kerry. He also likes gardening.

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