China tries to curb food prices after consumer inflation hits two-year high

 
Marion Dakers
CHINA said yesterday it would step up efforts to keep commodity prices stable, in its latest attempt to keep fast-rising inflation rates in check.

China’s central cabinet has asked local governments to increase agricultural production and keep a constant coal, oil and gas supply in a seven-page circular.

The government has urged local groups to ramp up vegetable-planting programmes and better manage grain production to ensure a continuous supply.
Delivery costs on farm produce, such as road tolls, will be banned from 1 December in the hope the savings filter down to retail prices.

Local governments will have the power to set prices on daily necessities and production materials if and when the high costs become unaffordable.

Market monitoring will increase, to clamp down on hoarding and speculation in major agricultural products, the circular added.

China has been trying to limit excess liquidity to keep a lid on inflation pressures, after the consumer price index hit a 25-month high of 4.4 per cent in the 12 months to October. Food costs contribute to a third of the total index rate, the government said.

The People’s Bank of China, the country’s central bank, said on Friday it would raise capital reserve requirements by 0.5 per cent for all Chinese banks for the fifth time this year to control credit and liquidity.

The country has been criticised by the United States and other nations for artificially keeping its currency undervalued. It was claimed that would give it a trading advantage in the global market.