Consumer prices in China surged to a 8.7 percent annual rate in February from a 7.1 percent rate in January, the fastest pace of increase in more than 11 years, China’s National Bureau of Statistics announced on Tuesday morning.
Food prices were the biggest contributor, up 23.3 percent from February of last year. Snowstorms in China damaged harvests and interfered with food deliveries to cities, while rising global commodity prices made imports more expensive.
“The current price hikes and increasing inflationary pressures are the biggest concern of the people,” Prime Minister Wen Jiabao said in a speech last Wednesday.
The Chinese government imposed complex price controls in January on a range of farm products, like cooking oil and grain. In a speech on Sunday, President Hu Jintao of China urged local governments to maintain stable prices for vegetables and other perishables, which suffered particular losses during the storms.
But some economists saw the consumer price index’s acceleration in February as a sign of a broader problem in China that could be harder to fix.
The Chinese government has been issuing vast sums of Chinese currency each week so as to buy up dollars from the country’s trade surplus and investment inflows, while Chinese banks have been lending aggressively, creating a surge in circulating money.
“While we believe the snowstorm contributed to the high February reading, we believe that rapid money supply growth has been the main driver of high and rising inflation,” said Yu Song and Hong Liang, two Goldman Sachs economists, in a research note.
China announced separately on Monday that producer prices were up 6.6 percent in February from a year earlier, compared with 6.1 percent in January.
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