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    Chinese Consumers Hoard Goods Amidst Inflation Fears


    by NTDTelevision

    Chinese authorities are facing an uphill battle to keep prices under control after inflation rose to a 25-month high. Within China, inflation is hitting consumers hard and could feed growing domestic unrest.

    Millions of Chinese spend the majority of their income on food, so it's little wonder that inflation is a big concern. All the more so when it's led by rising food prices.

    China's inflation surged to a 25-month high in October. Overall, prices rose 4.4 per cent year on year. And within that, food prices increased by 10.1 per cent.

    Chinese newspapers around the country are carrying reports of consumers hoarding food items like salt and cooking oil in anticipation of higher prices.

    A recent report in China Daily said consumers could look to real estate to hedge against further inflation. But that goes against efforts by authorities to cool what is widely seen as a property bubble.

    Official action after last week's inflation announcement was swift. In an effort to slow growth, authorities raised banks' reserve deposit ratio. And many believe an interest rate hike is around the corner.

    [Simon Rabinovitch, Thomson Reuters Chief China Economics Correspondent]:
    "Beijing has to get on top of the price pressures. This is really a big concern now for the government."

    The People's Bank of China has blamed U.S. monetary policy for China's inflation. But there is little doubt Beijing's multi-billion dollar stimulus during the financial crisis was also a major factor.

    And what worries many Chinese officials is that rising prices could lead to domestic unrest.