Inflation concerns have deepened significantly in Chinese policymaking circles since October statistics revealed that the consumer price index reached 4.4 percent compared to the previous year. The Chinese economy resumed rapid growth after the global economic crisis by boosting government investment and bank lending. Now the system is awash with cash, and fast growth, high trade surpluses, foreign investment and "hot money" inflows have added to inflationary pressures. Beijing must pay close attention to price inflation in the critical category of food, since high food prices are the most likely to cause social unrest. While October statistics showed overall food inflation at about 10 percent, compared to the previous year, the Chinese public has felt much more acute price rises, perhaps seven percentage points higher — the official consumer price index is outdated, having been formulated in 1993. The Ministry of Commerce provided a more accurate picture of the hardest-hit categories on Nov. 16 when it announced that in early November, the average wholesale price of 18 vegetables in 36 cities across China had risen by 62.4 percent compared to the same period last year. China's powerful National Development and Reform Commission has declared it will install price controls on food and develop a system to hold mayors of cities accountable for food prices and supply.
