Beijing, inflation at 7.1%, the highest in 11 years
Beijing(AsiaNews/Agencies) - The National Bureau of Statistics has published inflation rates for the month of January 2008; it has increased by over 7.1%, the highest rate of increase in 11 years: December it rose by 6.5%. The hike in inflation is due first and foremost to the rise in food prices. Food stuffs constitute one third of the total upon which expenditure is calculated. Food prices have caused total prices to rise by 18.2% in one year. The cost of pork meat, the staple diet for most Chinese, rose by over 58.8% in one year alone.
The rise in food prices it seems is linked to the bad weather which devastated many regions in China in January.
Not all economists believe that inflation can continue to rise in such a manner. Prices of other components – non food products – only appear to have risen by 1.5%. Other observers – such as Deutsche Bank – maintain that we will see further increases, and that next month inflation rates could touch 8.8%.
The hike in food prices together with stagnant wages, risk fostering increased discontent among the population and is already the root cause of many popular uprisings.
Analysts forecast that China will have to respond to the increased inflation with a more careful monetary policy, allowing the Yuan to gain strength. Today already the Central Bank appreciated the Yuan to 7.15 per US Dollar.
Monetary policies are useless on their own, however: the rise in prices is hitting the poorest hardest, increasing the abyss between the rich and poor in China, already one of the world’s widest social divides. This is why some delegates from the National Peoples Assembly, the Chinese Parliament, have proposed social aid linked to inflation rates for the weakest social classes.
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