China‘s government has said it will provide
poorer households with subsidies in response to double-digit food price
inflation.
Inflation
accelerated to 4.4% in October, with food prices rising 10.1%.
The
government also said it had not ruled out price controls if current grain and
vegetable shortages worsen.
Meanwhile
the Shanghai
stock exchange has fallen nearly 10% in four days on fears of more interest
rate rises in response to the price rises.
The
Shanghai composite
index ended Wednesday down a further 1.9%, having fallen more than 4% on Friday
and again on Tuesday.
The
People’s Bank of China raised rates unexpectedly in October in response to
growing inflation pressures, and has adopted a more hawkish tone since.
Consumer
price inflation rose to 4.4% in October, which was up from 3.6% a month earlier
and its highest level in two years.
The
average wholesale price of some vegetables in Chinese cities rose by nearly
two-thirds in the first 10 days of this month, raising fears that food hoarding
was exacerbating shortages.
It
is also thought the government may be considering stiffer penalties for those
caught hoarding food.
The
latest move comes after premier Wen Jiabao said the government was “formulating
measures to curb the overly fast rises of prices”.
“Great
attention should be paid to market supply and demand and prices because they
are related to the public’s basic interests,” added Premier Wen in his
statement.
The
government also announced it would increase diesel supplies after industries
reported fuel shortages.
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