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Beijing - China's annual consumer price inflation jumped to 6.5 per cent in August, the highest level since December 1996, as a shortage of pork contributed to a surge in food prices.
China's ruling Communist Party, aware that inflation in the past has seeded unrest in China, has voiced increasing concern about the speed of price rises and has introduced a raft of incentives to increase the supply of pigs and pork.
The inflation rate, up from 5.6 per cent in July, surpassed economists' forecasts of 5.9 per cent and cemented expectations that the central bank will keep tightening monetary policy.
A shortage of pork, China's staple meat, has been the main reason for the spike. China's pig population has fallen 10 per cent due to disease, fast-rising feed grain costs and low prices last year, which prompted farmers to rear fewer hogs.
Food accounts for a third of China's consumer price basket.
Most economists accept a central bank can do little about supply shocks, and non-food prices rose just 0.9 per cent in August from a year earlier To keep a lid on inflation and prevent the world's fourth-largest economy from overheating, the central bank has raised interest rates four times this year and ordered banks on seven occasions to tie up more of their deposits in reserve.
The National Bureau of Statistics said meat prices rose 49 per cent in August from a year earlier.
- Reuters