| Food Prices Driving China's Inflation |
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| Wednesday, 12 September 2007 | |
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Growing inflation concerns are increasing pressure on Beijing to boost interest rates in an effort to drain money out of the economy. While overall inflation hit an 11 year high of 6.5% in August, the real area for concern remains the spiraling food prices, which jumped 18.2%, including a 49% increase in meat products year-on-year. At the heart of the increase lies a continued shortage of pork following rampant outbreaks of the blue-ear pig disease, compounded by crop damage from flooding and generally higher global prices. The very real increase in basic staples has to worry the central government, as this is the type of inflation that hits consumers’ pocketbooks first and foremost. A prolonged bout of inflation could potentially create social unrest as China’s working class literally struggle to put food on the table. Not a scenario Beijing wants to consider in the lead up to the Olympics.
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