Home > China, Droughts, Food Crisis > Inflation in China rises as food prices soar

Inflation in China rises as food prices soar

February 16, 2011

A woman selects vegetables on a store inside a market in Beijing, China Tuesday, Feb. 15, 2011. A jump in food prices pushed China's inflation higher

Consumer prices rose 4.9 percent, driven by a 10.3 percent jump in food costs, data showed Tuesday. That was up from December’s 4.6 percent rate and close to November’s 28-month high of 5.1 percent.  Inflation is politically dangerous for Beijing because it erodes the Chinese public’s economic gains and threatens acceptance of communist rule. China’s poorest families spend up to half their incomes on food and are hit hard by price rises.

In January, the price of fresh fruit soared by 34.8 percent over a year earlier, while eggs rose 20.2 percent, the National Bureau of Statistics reported.

Adding to a squeeze on food supplies, China’s wheat-growing northeast is in the grip of a severe drought that threatens its crop. Beijing has launched a $1 billion emergency campaign of cloud-seeding to induce rains and expanded irrigation.

Also in January, inflation that so far has been confined mostly to food began to spread to other goods. Nonfood prices rose 2.6 percent from a year earlier, accelerating from December’s 2.2 percent gain.

Producer prices rose 6.6 percent, indicating consumers will face more increases as companies pass on higher costs.

Food prices are sure to hit another record this month as prices in January were the highest on record.   Surging food prices and shortages is one of the reasons why the Arab world is on fire right now with civil unrest in nearly a dozen countries.  Food prices are set to rise in America after floods in Australia, the massive snow storm weeks ago and a deep freeze that has destroyed nearly the entire produce crop in the southwestern united states and northern Mexico.

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