News / Asia

China Sees Highest Inflation in More Than Two Years

An elderly Chinese couple pushes carts load with groceries as they shop at a supermarket in Beijing, China, 11 Nov 2010
An elderly Chinese couple pushes carts load with groceries as they shop at a supermarket in Beijing, China, 11 Nov 2010

Inflation in China for the month of October rose well above the official target, which is leading to increased pressure on the Chinese government to introduce new tightening measures. Stephanie Ho reports from Beijing.

Official statistics released Thursday show China's inflation rate for October jumped to 4.4 percent, the highest in 25 months.

The highest inflation came in foodstuffs, which saw prices rise more than 10 percent. The official target for overall inflation this year is 3 percent.

Brian Jackson, a financial analyst in Hong Kong with the Royal Bank of Canada, thinks inflation in China has been high, and is still likely to move higher.

"It's been going high for about eight months now, and that is causing a lot of concern for the cost of living for Chinese households," said Jackson. "And I think that is putting a lot of political pressure on policy makers in Beijing to take firmer actions to try and keep inflation under control."

Jackson says one way China can keep inflation under control is to increase interest rates. He adds that strong inflation in China also may also support foreign critics who want China to let its currency, the yuan, rise in value.

"That is going to bring down imported inflation, and help keep prices in general under control," he said. "So, there is a lot of pressure globally on China to do more on the currency, but I think there are some pretty strong domestic reasons for them to move in that direction as well."

At a regular news briefing in Beijing, Foreign Ministry spokesman Hong Lei indicated China is not likely to change its policy any time soon.

Hong says China's currency policy has been, in his words, "consistent and responsible."

Cleaning lady Li Mei says she is feeling the pain of higher prices for staples like salt, sugar, vegetables and eggs.

Li says she had decreased the amount of food she buys. But at the same time, she says if she is used to eating two eggs at a time, it will be very difficult to only eat one.

Mr. Liu, a manual laborer from northeastern Jilin province, says things have become unbearably expensive.

Liu says he cannot afford to buy anything at the moment. He says if he wants to survive, he has to figure out how to spend less money.

He added that life is difficult for ordinary people, and that he would like to see the government do more to help.

Inflation is a politically sensitive subject in China, where rapidly rising prices in the past have caused social unrest. Many China political analysts and economists expect Beijing to try to tamp down prices in the coming months.

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