Thu, Jun 23, 2011 - Page 10 News List

Inflation in China set to rise this month: official

PRICING POWER:Reports in the state media cited farmers who said vegetable output in some areas dropped by as much as 20%, while prices of green vegetables rose 40%


China’s surging inflation should rise again this month after flooding damaged crops and pushed up food costs, the government said yesterday.

Chinese Communist Party leaders have declared taming soaring living costs their priority this year and have been frustrated as inflation climbed steadily, hitting a 34 month high of 5.5 percent last month. Inflation is especially dangerous because it erodes economic gains on which the party bases its claim to power.

“The estimate is that the overall price increase in June will be higher than May,” said a statement from the National Development and Reform Commission, the State Council’s economic planning agency. It gave no specific target for this month.

In the second half of the year, “new price increases should decline and prices for the full year can be controlled,” the statement said.


The agency said floods in eastern and southern China that damaged crops were partly to blame. The price increases last month were driven by an 11.7 percent jump in the cost of food.

Earlier reports by state media cited farmers who said vegetable output in some areas was down by as much as 20 percent. Xinhua news agency said prices of green vegetables were up 40 percent in some areas.

Private sector analysts blame China’s inflation on the dual factors of demand fueled by higher incomes that is outstripping food supplies and the effects of a bank lending boom that helped the country ward off the 2008 global crisis.

Beijing is trying to cool an overheated economy that grew at a sizzling 9.7 percent rate in the first quarter of this year.


The government has raised interest rates four times since October last year and has told banks to increase their reserves to limit lending.

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