CHINA'S consumer prices last month shot to the highest rate in more than a decade, mainly driven by uncurbed food costs, the National Bureau of Statistics said yesterday.
The increase of the key inflation gauge puts further pressure on the central bank to impose more stringent measures of economic control, analysts said.
The Consumer Price Index in October jumped 6.5 percent compared to a year earlier, equal to the surge in August which was the highest since the seven percent hike recorded in December 1996.
The growth last month followed September's rise of 6.2 percent. The combined CPI rose 4.4 percent in the first 10 months, said the statistics bureau.
Li Maoyu, an analyst with the Changjiang Securities Co Ltd, said higher food costs remained a major influence in the CPI's October surge.
Food prices, which make up about one-third of the CPI, rose 17.6 percent last month compared with a 10.6-percent gain through September. The growth did drop a little from the August gain which swelled 18.2 percent year on year.
"Compared with China's fast expanding economic growth, the CPI is still climbing within a controllable range," said Li. "But the increase in food prices is a heavy blow for low-income households."
Costs of pork, China's staple meat, soared 54.9 percent in October from a year ago while meat and poultry prices jumped 38.3 percent. The prices of cooking oil also rose 34 percent.
The numbers came a day after Premier Wen Jiabao visited a poorer part of Beijing, asking residents if they could afford to eat meat and telling them he understood even a one-yuan (US$0.14) rise in prices had an impact on the lives of ordinary people.
The premier said the government was trying to ensure adequate supplies by giving support to producers of pork, cooking oil and dairy items and encouraging imports to contain price hikes.
Food prices, which tend to be volatile, are excluded from core inflation, but some economists warned that the surge in prices for everything from pork to cooking oil could trigger higher wage demands and spill over to the broad economy.
The costs of cooking oil and other basics were frozen in September and the central government is encouraging farmers to raise more pigs, promising free vaccinations and other aid. Economists say price pressure should ease when a new grain crop is harvested and more pigs come to market.
Farmers had been reluctant to raise more pigs in part because of an outbreak of blue ear disease, which killed 70,000 animals and prompted the government to destroy thousands more. The government declared last week it had brought the outbreak under control.
The non-food category of the CPI reported a 1.1-percent price growth, nearly unchanged in the past nine months.
"But people should be aware that there are more expensive prices for producers which may spread into the consumer section," said Li.
China's Producer Price Index, the main gauge of factory-gate inflation, rose 3.2 percent year on year in October, the highest since January this year.
The growth of PPI was fueled by the higher costs of oil and its substitutes.
Starting this month, China raised the prices of gasoline, diesel and aviation kerosene by 500 yuan per ton to bridge the gap with the surging crude oil costs in the global market.
In October, retail consumer prices for water, electricity and fuel rose 2.9 percent.
Stephen Green, a senior economist with the Standard Chartered Bank (China) Ltd, said three more interest-rate rises of 0.27 basis point each are in the pipeline, one this year and another two in the first quarter of next year.