Statistics

Rising food costs boost China's inflation rate to 25-month high

(Xinhua)
Updated: 2010-11-11 10:07

BEIJING - Surging food prices pushed up China's consumer price index (CPI), a major gauge of inflation, to a 25-month high of 4.4 percent in October, the National Bureau of Statistics (NBS) said Thursday.

The figure topped the market forecast of around 4 percent and was sharply up on September's 3.6-percent growth.

On a month-on-month basis, China's CPI rose 0.7 percent in October, said NBS spokesman Sheng Laiyun.

The price of food, which accounts for one third of the basket of goods used to calculate China's CPI, surged 10.1 percent year-on-year in October.

Related readings:  China's October CPI to rise 4.1%: forecast  World Bank raises forecast of China 2010 GDP growth to 10%  China's CPI not to exceed 3.5% in 2010: NBS

The October food price increase compared with a year-on-year growth of 8 percent in September, 7.5 percent in August, 6.8 percent in July and 5.7 percent in June.

In October alone, food prices rose 1.1 percent, while non-food prices climbed 0.4 percent from September, Sheng said.

The producer price index, a major measure of inflation at the wholesale level, rose 5 percent in October from a year earlier, 0.7 percentage points higher, he said.

From January to October, China's CPI rose 3 percent year-on-year, hitting the government's target ceiling for the year.

"China needs to do more to keep this year's inflation under the target ceiling," Sheng said. Pressure for further price increases were mounting, while quantitative easing policies taken by other economies would fuel inflation expectations within China.

The Chinese government has been striving to cool inflation and maintain economic momentum after its economy quickly rebounded from the global financial crisis.

China's central bank raised benchmark interest rates last month and ordered banks to set aside more reserves Wednesday in an effort to rein in liquidity.

The country's broad money supply (M2), which covers cash in circulation and all deposits, increased 19.3 percent year-on-year by the end of October to 69.98 trillion yuan ($10.57 trillion).