China's inflation rate soared to its highest level in over 11 years in January, official data showed today, as the worst winter weather in decades played havoc with food prices and supply lines.
China's main inflation gauge spiked to 7.1% last month, the National Bureau of Statistics said, pushed up by an 18.2% rise in food prices, with the cost of pork jumping 58.8% compared with a year ago.
The consumer price index was within analysts' expectations after three weeks of freak winter weather in January and early February hit China's south and southwest, destroying crops and disrupting power and transport networks.
The ice and snow storms came just ahead of the Lunar New Year, when prices tend to rise several weeks ahead of the holiday period that this year fell in early February.
'The CPI was mainly driven up by factors including the severe snow disaster that ravaged more than half of the country's areas,' the official Xinhua news quoted Yao Jingyuan, the chief economist of the statistics bureau, as saying.
Inflation in China has continued to rise sharply despite a wide range of government measures to keep a lid on prices and rein in the nation's economy, which expanded at a 13-year high of 11.4% in 2007.
As part of those efforts, China last year raised interest rates six times and increased the amount of money commercial banks needed to set aside in reserves 10 times.
But taming inflation became far tougher in China in January due to the weather, which was the coldest in more than half a century, and its effects on inflation are expected to continue to be felt throughout 2008.
The inflation figure for January compared with a 6.5% figure in December, and was the highest since September 1996, when the index rose 7.4%.
That rising trend poses a knotty dilemma for China's policy makers, who now face the challenge of slowing the galloping inflation rate just as an economic contraction in the US could slow the globe's appetite for Chinese exports.
