Food price rises trigger inflation concerns

The recent surge in agricultural products have sparked concerns that inflation will rebound. China's consumer price inflation jumped to a seven month high of 2.5% in December.

China's annual inflation hit 2.6 percent in 2012-- a three-year low. The increase was far below the government's target of below four percent. But recent signs suggest inflation may have bottomed out and could be picking up pace.

Cui Bo, Manager of Anhui Agri-Materials Co., Ltd, said, "In the week of January 7th, prices of seeds and pesticide jumped ten percent year on year. Chemical fertilizer is also on an upward trend."

For now, analysts say price rises will still be within an acceptable range.

Yin Zhongli, researcher at Inst. of Finance & Banking, Chinese Academy of Social Sciences, said, "The public don't need to be anxious. As China maintains the stance of a prudent monetary policy, product prices will steadily rise. The inflation rate will be less than four percent. "

But given how much weighting food prices have in the CPI index, it is time for government measures to ensure the supply of farm produce and limit price rises.

The Ministry of Agriculture says vegetable prices have risen for 10 straight weeks, surging 55 percent during that period. Historically, fresh food prices continue to rise in the run-up to Chinese New Year. But usually price pressures gradually ease after the Spring Festival.