China's April inflation rises to 8.5 pct

Consumer prices in April were up 8.5 percent compared with the same month last year, the National Statistics Bureau reported. That was up from March's 8.3 percent rate and just short of February's 8.7 percent, the highest inflation in 12 years.

Consumer prices have jumped since mid-2007, driven by rises in food costs that hit 22.1 percent in April. The government has been trying to cool price rises for pork, grain and other items by increasing supplies and has imposed controls on basic goods.

"We believe the April inflation data suggests that it is still far too early to claim success in the battle against inflation," Goldman Sachs economists Yu Song and Hong Liang said in a report to clients.

Soaring food prices are especially worrisome to Beijing because they hit China's poor majority hardest.

There have been no reports of demonstrations, but bouts of high inflation in the 1980s and '90s set off protests -an embarrassment that communist leaders want to avoid ahead of August's Beijing Olympics, which they hope will showcase China as a prosperous, stable society.

A senior economic official, Vice Premier Wang Qishan, said Friday that Beijing will stick to tight monetary policies to prevent inflation from escalating. But he announced no new initiatives.

Beijing is trying to cool a boom in lending and investment that it worries could fuel broader inflation. It has raised interest rates repeatedly over the past two years and tried to curb credit growth by forcing banks to set aside more reserves.

Prices began to rise in mid-2007 as China ran short of pork, grain and some other basic goods.

The government has assured the public that China has enough grain and is paying farmers to raise more pigs. But efforts to boost food supplies were hampered by China's most severe winter storms in decades, which wrecked crops and disrupted shipping.

The sharpest inflation has been limited to food but the costs of raw materials and energy are edging up, raising pressure for producers to pass on rising prices to consumers.

April's nonfood inflation was 1.8 percent, matching March, which was the highest in more than a year, according to the government data. The rate stayed at or below 1 percent through 2006 and '07.

Producer prices rose 8.1 percent in April, driven by rising energy costs, according to the government.

April's 22.1 percent rise in food costs was fueled by a 68.3 percent jump in the price of pork, 46.6 percent in that of cooking oil and 13.6 percent for fresh vegetables.

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