China's January Inflation Rises 7.1 Pct
By JOE McDONALD
BEIJING (AP) — China's inflation accelerated to 7.1 percent in January — its highest rate in 12 years — after devastating snowstorms worsened food shortages, setting back government efforts to cool rising prices, according to data reported Tuesday.
Economists warn that inflation could rise further due to high costs for coal and other industrial materials.
"Inflation has been mainly driven by food prices, but higher energy and labor costs are adding upward pressure on prices," said Jing Ulrich, chairwoman of China equities for JP Morgan, in a report to clients.
January's sharp rise in consumer prices was driven by an 18.2 percent increase in food costs from the same period a year ago, the National Bureau of Statistics reported on its Web site.
High inflation could complicate government efforts to keep the fast-growing economy from overheating and add to pressure to let the exchange rate of China's currency, the yuan, rise faster.
China's economy grew 11.4 percent in 2007 and, despite slowing slightly, is expected to expand by at least 9 percent this year.
Economists expect more interest rate increases this year to cool a boom in lending and investment. Authorities have raised rates repeatedly over the past two years to keep growth in check.
Letting the yuan rise faster, especially against the U.S. dollar, could help to cut China's swollen trade surplus by making exports more expensive in foreign currency terms. That could ease a flood of export revenues flowing through the economy that are adding to pressure for prices to rise.
Analysts have boosted inflation forecasts for China since the January storms, which wrecked crops and killed millions of farm animals across the south. Deutsche Bank says inflation could hit a peak of up to 8 percent for the first quarter of the year before it eases.
The storms disrupted government efforts to ease shortages of pork, grain and other goods that are blamed for a food price spike that began in mid-2007.
January's increase was the highest since September 1996, according to Lehman Brothers. December's rate was 6.5 percent, also driven mostly by food costs.
Other indicators suggest China faces growing pressures that might push up prices.
China's producer price index — which measures prices of goods as they leave the factory — rose by 6.1 percent in January, its highest rate in three years, due to high commodity prices and transportation disruptions blamed on the snow, the government reported Monday.
"Higher prices at the producer level could lead to rising consumer prices as producers might be pressured to increase prices of consumer products to offset rising costs," the official Xinhua News Agency said.
Analysts worry that sustained inflation might prompt Chinese exporters to raise prices, possibly fueling inflation abroad.
Wages in the Pearl River Delta near Hong Kong, the heart of China's export-driven manufacturing industries, have risen 13 percent over the same period last year as employers try to attract workers amid fears of a possible labor shortage, according to a survey reported Tuesday by the official China Daily newspaper.
Among individual goods, pork prices rose 58.8 percent in January compared with the year-earlier period, while other meat was up 41.2 percent and cooking oil 37.1 percent, according to the statistics bureau.
Chinese leaders are especially worried about the political impact of rapidly rising food costs, which hit the country's poor majority hard.
Beijing is paying farmers to raise more pigs and has tried to increase grain supplies by imposing export curbs. So far, the inflation spike is confined to food, according to the data reported Tuesday. They showed prices for non-food items up only 1.5 percent in January over the same month last year.
But Chinese leaders worry that chronic high increases in food costs will spread to other parts of the economy.
Yah we are already paying substantially more for food.
China will drive up prices of oil too.
That is external factors, all please don't forget the policies and internal facters "man made" that impact us the most
i had char siew and roast pork rice just the other day.
knn, from 2,50 to 3 to 4 in just a few months.
sibei jialat!!!!
Originally posted by dragg:i had char siew and roast pork rice just the other day.
knn, from 2,50 to 3 to 4 in just a few months.
sibei jialat!!!!
The last time I've seen char siew and roast pork rice @ $2.50 was more than a decade ago.
the gubbymen's salaries have gone up.
hows the about the you's?
oso rights?