The opposite was true in the non-tradable services such as government and health care.
As the name suggests, non-tradable goods and services are not traded across long distances.
Increasing demand for non-tradable services should do just as well, as the years before the crisis attest.
"Productivity Growth of the Non-Tradable Sectors in China", by Dong He, Wenlang Zhang, Gaofeng Han and Tommy Wu.
The increase in non-tradable goods prices on the year is up 8.15 percent.
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While tradable inflation moderated slightly, non-tradable and regulated prices such as energy accelerated once again, on the back of service price increases.
There are other signs of overheating: inflation for non-tradable products in Chile is 6.4% and Brazilian wages are increasing at double-digit rates.
The biggest price differences tend to persist in non-tradable services.
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Such conditions will keep pressuring non-tradable goods price inflation like labor, which Nomura Securities projects to stay above 8 percent year over year until the third quarter of 2013.
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Recent research by Michael Spence and Sandile Hlatshwayo of New York University's Stern School of Business found that 98% of employment growth between 1990 and 2008 occurred in non-tradable industries.
In the 6 percent inflation case, although tradable goods prices, like soybeans and corn, are projected to rise to the 4.5 percent inflation target set by the Central Bank, non-tradable prices like services will go as high as 9 percent and pull the IPCA higher as a result.
Some 98% of the 27m net new jobs created in America between 1990 and 2008 were in the non-tradable sector of the economy, which remains relatively untouched by globalisation, and especially in government and health care the first of which, at least, seems unlikely to generate many new jobs in the foreseeable future.
Although some CVRs are registered tradable securities, the majority are non-transferable because the issuing company does not want to incur the additional cost, disclosure obligations, and legal responsibilities associated with registering them with the SEC.
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