Tuesday, June 12, 2007

Inflation in China surges to two year high

Chinese inflation rose to its highest level in more than two years, raising renewed concerns about potential fallout of the sizzling growth in the economy. The surge in inflation is mainly driven by soaring prices for pork and other food items. According to government figures released Tuesday, consumer prices rose by 3.4 percent in May, while food prices jumped 8.3 percent from a year ago.

A rise in food prices is politically sensitive, as it will affect the common masses who have not benefited from the prosperity generated by the country's two-decade-old boom. Beijing has adopted a series of monetary measures aimed at cooling the economy and the latest inflation figure may induce further tightening.

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