China's consumer prices rise to a three-year high in June as food prices soar 14.4 percent
Monday, July 11, 2011
China's National Bureau of Statistics released data Saturday showing that the (CPI) for June climbed 6.4% from a year ago. That compares with a 5.5% rise in May, which was the largest since a 6.3% increase in July 2008. The major factor contributing to this figure was the steep rise in food prices which climbed 14.4%. is a major food staple in China, and its price rose 65% from last year.
Analysts predicted that China's Beijing may have difficulty in controlling inflation.would peak in June, but particularly worrisome was the steep rise in the cost of food from the same time last year and up from 11.7% in May, indicating that
|We must treat stabilising overall price levels as the top priority ... and keep the direction of macro-economic adjustments unchanged.|
—, Premier of China
China is the world's second largest economy, having grown robustly in the last two years driven by aof $586 billion and low interest rates offered by state-owned banks. These were directed at promoting investments in real estate construction and government infrastructure projects, enabling China to lead the global recovery after the collapse of the U.S. mortgage market led to a worldwide recession.
Now Beijing is attempting to slow its fast pace of growth, fearful of inflation, by restricting bank lending and raising interest rates. High inflation along with high property values could hurt the economy. Since October, China’s Central Bank has raised interest rates five times.
Many factors are contributing to China's inflation, including higher wages for migrant workers, increases in the prices of food and gasoline, as well as diminished output from crucial agricultural areas cause bys and flooding this spring.
Today, China's Premierindicated that the war on inflation was continuing and controlling inflation was a top priority for the government, increasing expectations that interest rates would be further increased.
|If they signal any comfort with inflation, and inflation is as high as it is now, they could create an environment in which people would panic, and they can have a real problem on their hands.|
—Tim Condon,Asian researcher
"We must treat stabilising overall price levels as the top priority of ourcontrols and keep the direction of macro-economic adjustments unchanged," Wen said today in comments reported on the central government's website. He had said in March that the ruling is worried that a continuing rise in food prices could result in public protests.
Wen said the government would boost the supply ofto keep the price of pork stable, the price of pork being the major contributor to China's food inflation index and the most closely watched item on it.
"If they signal any comfort with inflation, and inflation is as high as it is now, they could create an environment in which people would panic, and they can have a real problem on their hands," said Tim Condon, Asian researcher at.
As markets worried about the news of Chinese inflation as well as concerns about the, oil dropped below US$95 a barrel today.
- "Massive flooding in China; over 550 thousand evacuated" — Wikinews, June 18, 2011
- "Poverty rises as food prices increase" — Wikinews, April 17, 2011
- Chris Kahn, AP. "Oil drops below $95 per barrel" — , July 11, 2011
- "China's Wen says inflation top priority, more tightening seen" — , July 11, 2011
- V. Phani Kumar. "China’s June inflation rises 6.4%" — , July 9, 2011
- David Barbosa. "China’s Struggle With Inflation Continues as Price Index Rises" — , July 9, 2011