Friday, 1 February 2008

Inflation Storm Ahead

The severe storms in China will have serious consequences for firms that reply on brisk holiday trading. However, the more worrying issue is the effect the storm damage will have on food prices.

Jan. 30 (Bloomberg) -- Rain and snowstorms in China have ``severely'' damaged rapeseed, vegetables, wheat and other crops in 16 provinces, hampering the government's measures to increase agricultural production and curb inflation.

As much as 103 million mu (17 million acres) of crops were damaged, including 1.8 million acres that were completely destroyed, and the damage may spread as more storms are expected, the ministry of agriculture said in a statement on its Web site.

China boosted farming subsidies last year to increase food production as meat and oilseed shortages stoked inflation and threatened social stability.

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