Thursday, November 11, 2010

China's Inflation Jumps to A 25-Month High; Food Inflation Is 10.1%

China's inflation jumped to a 25-month high in October as food costs soared.

Inflation was 4.4%, with 10.1% increase for food, far above the official target of 3%, and also much higher than September's 3.6%
Business Week says this occurred "despite government efforts to cool living costs, raising the possibility it might impose new controls that could further slow economic growth". [...] "Beijing wants to cool inflation and guide China's rapid expansion to a more sustainable level after its stimulus-fueled rebound from the global crisis. It raised interest rates last month and ordered banks on Wednesday to increase reserves in a move to curb lending".

"Inflation is especially sensitive in a society where poor families spend up to half their incomes on food. Rising incomes have helped to offset price hikes, but inflation erodes the value of savings and undercuts economic gains that help support the ruling Communist Party's claim to power".

China's food price inflation has risen steadily this year, increasing from 5.7%in June to 8% in September.

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