China: consumer inflation in July jumped

August 14, 2007 - 0:0

BEIJING (AP) -- China's inflation rate accelerated to 5.6 percent in July -- the highest monthly rate in a decade -- driven by a surge in politically sensitive food prices over the year-earlier period, according to data released Monday.

Chinese leaders are worried that a boom that saw the economy grow 11.9 percent in the latest quarter might ignite inflation. They have tried to cool the boom by raising interest rates three times in the past six months, and economists expect one to two more increases this year.
July's inflation was the highest monthly rate since February 1997 and an increase over June's 4.4 percent rate. The next-highest monthly rate was 5.3 percent in August 2004.
A statistics bureau spokesman tried to quell fears of a pickup in overall inflation, stressing that July's sharpest increases were limited to food.
Prices of clothing and other non-food goods rose just 0.9 percent in July from a year ago, according to the bureau.
""As industrial product prices and service prices remain relatively stable, the prices should not rise in an all-around and sharp way,"" said spokesman Li Xiaochao.
Yao Jingyuan, the bureau's chief economist said inflation might continue to rise over the next two months due to food-price hikes. It said Yao predicted the inflation rate would fall in the final quarter of the year.
Consumer prices in the first seven months of the year rose 3.5 percent compared with the same period of 2006, the statistics bureau said on its website.
Chinese leaders are trying urgently to curb the sharp rise in food prices, which hit the country's poor majority hard