Chinese inflation hits decade high

Chinese inflation climbed to a 10-year high of 5.6% in July, led by a sharp increase in food prices.

July’s annual inflation rate was the highest since February 1997, and was up from June’s rate of 4.4%.

The latest inflation data is likely to mean more Chinese interest rate rises. Rates have already risen three times in the past six months.

The increase in the price of food is politically sensitive for the Chinese government, as it hits the poorest levels of society the hardest.

Beijing has already pledged to hand pig farmers free vaccines for their animals after a recent outbreak of disease reduced the supplies of pork reaching the marketplace, leading to upward price hikes.

Chinese authorities have also ordered investigations into whether farmers or food companies are colluding to push up prices.

Chinese inflation is also being fuelled by the country’s economic boom that saw the economy expand at a breakneck 11.9% from a year earlier in the April-to-June quarter.

However, the main Chinese statistics bureau stressed that the price of other commodities such as clothing and other non-food items was up by only 0.9% in July from a year earlier.