Tuesday, February 15, 2011

Inflation Hits Nearly 5 Percent in China, With Food Costs Soaring

Published: February 14, 2011
BEIJING — Consumer prices in China rose 4.9 percent in January when compared with the same month a year earlier, the government reported Tuesday, as inflation continued to bedevil the economy.
The rise in prices was less than expected, but some economists said the data was difficult to judge because the statistics bureau recalculated the index to give less weight to food costs and more weight to housing costs. Those shifts and other changes designed to catch up with consumption patterns made it impossible to directly compare the January data to earlier months.
Nonetheless, some analysts said the data suggests that inflation is spreading.
While food prices rose most sharply, the costs of a broad array of other goods and services also ticked upwards. “This shows a broadening of inflation away from just food,” said Paul Cavey, head of China economics at Macquarie Securities.
Prices for services and goods other than food rose 2.6 percent in January over the same month a year earlier, compared with a rise of 2.1 percent in December. Dariusz Kowalczyk, a senior economist at Crédit Agricole in Hong Kong, said the increase in January was the highest since the government began issuing that data six years ago and indicates rising expectations of inflation.

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