Tuesday December 11, 2007

China CPI inflation surges to 11-year high of 6.9% on food, fuel

bloomberg.com :

China's inflation accelerated at the quickest pace in 11 years and the trade surplus swelled, adding pressure on the central bank to raise interest rates and let the currency appreciate faster to cool the economy. Consumer prices rose 6.9% in November from a year earlier after climbing 6.5% in October, the statistics bureau said today [11 Dec 2007].

Surging food and fuel costs and a record $238 billion surplus in the first 11 months have prompted the government to name inflation and overheating as the biggest threats to growth. Pork prices surged 56% in November from a year earlier, driven by a shortage of pigs. Food makes up a third of the consumer price index and rising costs pose a threat to social stability, illustrated by a stampede last month at a cooking-oil sale that killed three people in the central city of Chongqing. Overall, food climbed 18.2%. Non-food prices rose 1.4%, accelerating from a 1.1% gain in the previous month. Utility prices including water, electricity and gas rose 5.6%.

The inflow of cash from record exports, besides stoking inflation, has also fueled a surge in property and stock prices, with the benchmark CSI 300 Index gaining 152% this year. The central bank today ordered banks to tighten rules for real estate loans after property prices in 70 cities jumped 9.5% in October, the fastest pace in two years. China's economy, the world's fourth largest, expanded 11.5% in the third quarter from a year earlier.

See also :

1. China in grip of inflation
2. Living the diesel shortages in China

(2007-12-11 18:49:39 SGT) [Biz] Permalink

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