China's inflation rises to 7.1 per cent in January, highest in a decade

THE ASSOCIATED PRESS
BEIJING - China's inflation accelerated in January to 7.1 per cent - its rate highest in more than a decade - amid snowstorms that fuelled a spike in food costs, according to data reported Tuesday.

The sharp rise in consumer prices was driven by an 18.2 per cent increase in food costs from the same period a year ago, the National Bureau of Statistics reported on its website.

That came despite government efforts to ease shortages of pork, grain and other goods that is blamed for a six-month-old spike in food prices that has driven inflation to decade-high rates.

January's increase exceeded November's 6.9 per cent rate, which was the highest in 11 years.

Chinese leaders have tried to increase food supplies with steps including paying farmers to raise more pigs.

But economists have raised their inflation forecasts for the first half of 2008 after freak snowstorms battered China's south, killing millions of farm animals and wrecking crops.

Chinese leaders are especially worried about the political impact of rapidly rising food costs, which hit the country's poor majority hard.

So far, the rise appears to be confined to food, according to the data reported Tuesday. They showed prices for non-food items up only 1.5 per cent in January over the same month last year.

But Chinese leaders worry that chronic high increases in food costs will spread to other parts of the economy.

© The Canadian Press, 2008