Page last updated at 04:40 GMT, Tuesday, 11 March 2008

China inflation hits fresh high

China meat market
Prices of staples such as pork have soared in recent months

China's inflation hit 8.7% in February, the highest rate in over 11 years, the National Statistics Bureau said.

Soaring food prices were driving inflation, up 23.3% in February against the previous year, the bureau said.

It attributed the jump to snow storms last month that caused widespread disruption and to seasonal price rises over the Lunar New Year holiday.

Analysts had predicted a rise of 8.0% but the figure, up from 7.1% in January, was higher than forecast.

In recent months inflation has continued to rise despite higher interest rates and other measures by Beijing to keep the economy from overheating.

This is a serious concern for the government, which fears higher food prices could trigger social unrest.

Last week in a report to the National People's Congress, Premier Wen Jiabao said tackling inflation was "the biggest concern of the people".

Subsidies

February's inflation rate of 8.7% was the highest figure since May 1996.

The price of pork rose 63.4%, fresh vegetables were up 46% and cooking oil was up 41% compared to February 2007, the statistics bureau said.

Chinese Premier Wen Jiabao speaks at the opening session of the National People's Congress (NPC) at Beijing's Great Hall of the People, 5 March, 2008
Premier Wen Jiabao says controlling inflation is a key task

Non-food inflation rose only slowly, hitting an annual rate of 1.6%, the figures showed.

The jump followed severe winter weather that paralysed parts of China, delaying food and fuel deliveries and devastating crops and livestock.

But food prices have been rising since last year, partly because of supply problems.

Officials are working to tackle the problem by freezing prices of key commodities and expanding production of basic necessities.

Curbs have been placed on grain exports and farmers are being given subsidies to rear more pigs.

Last year, the government also raised interest rates six times in an attempt to keep inflation under control.

Analysts said in light of the latest figures they expected further interest rate rises.

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