Meaty Problem: Inflation at a record high

We have covered the Pork issue before - prices continue to increase. Non-food prices however retain a very low inflation rate. Things may yet sort themselves out.

Chinese inflation at decade high[BBC news]

Chinese inflation has hit its second 10-year high in two months, led again by a further sharp rise in meat prices.

China's rate of consumer price inflation hit 6.5% in the year to August, up from 5.6% in July, said the National Bureau of Statistics.

Meat price have risen 49% over the past year, caused by a shortage of pork after a series of disease outbreaks.

China's central bank has raised interest rates four times already this year to try to control inflation.

Less pigs

China, the world's biggest consumer of pork, has seen its pig population decline by 10% over the past year due to major outbreaks of blue-ear disease.

The Chinese government has moved quickly to stamp out the problem, but pork imports have surged as domestic supplies try to recover.

Beijing is said to be acutely aware that while the country's growing urbanised middle class can cope with the higher food prices, it is a major problem for the country's rural poor, who make up most of the population.

Non-food prices rose just 0.9% in the year to August.

"The risk is that if the economy continues to grow very rapidly, this inflation, which looks concentrated in food, starts spreading," said Rob Subbaraman, chief Asia economist for Lehman Brothers in Hong Kong.

Other post of interest:

Pork get the chop as prices rise