China's inflation rate hits a two-year high
- 11 November 2010
- From the section Business
China's inflation rate has hit a two-year high, largely thanks to rises in food prices, despite the government's efforts to dampen price rises.
October inflation hit a higher-than-expected 4.4%, up from September's 3.6%, the Bureau of Statistics said.
It added that the government needed to do more to control price rises.
Beijing has introduced a number of measures, including raising interest rates and curbing bank lending, to cool rapid economic growth and price rises.
Separate figures from the statistics bureau showed that industrial output in China rose by 13.1% in October compared with a year earlier, slightly slower than the 13.3% increase recorded in September, while retail sales rose by 18.6%.
"Price pressures are increasing. That means pressure on macroeconomic controls is increasing," said bureau spokesman Sheng Laiyun.
This means interest rates are likely to rise, analysts said.
"More rate hikes are clearly on the way," said Brian Jackson at the Royal Bank of Canada, who described the rise in the inflation rate as "eye catching".
Mr Sheng also said that the US's policy of pumping $600bn into its economy to stimulate growth would put further upward pressure on prices in China.
"The new round of foreign quantitative easing (QE) policy will release enormous liquidity, which will have rather a significant impact on the Chinese economy."
The US's fresh round of QE has been criticised by some countries as an attempt to devalue the dollar.
The issue of currency manipulation and global trade imbalances will be discussed later at the G20 meeting in Seoul.