Counting the cost as inflation strikes nation

08:42, November 30, 2010      

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A vendor sits in front of a pile of vegetables as he waits for customers at the Xinfadi open-air wholesale market in Beijing on Nov 23. Traders are also feeling the pressure. Reuters

Wang Qilu looked out from his street-side fruit and vegetable stall and sighed.

"Business is getting worse," he said, his eyes downcast. "Prices keep going up and fewer people are buying."

After 15 years of menial jobs, including work as a street cleaner and coal miner, the stall had provided the 41-year-old with a safe and steady income. Until he began to feel the force of inflation, that is.

According to the National Bureau of Statistics, food prices in October rose 10.1 percent year-on-year, the highest rate in two years. Vegetable prices alone climbed 18 percent.

The result has led to a massive 4.4-percent growth for China's consumer price index, a key indicator of inflation.

"Take the retail price of long beans," said Wang in Taiyuan, capital of Shanxi province. "To buy 1 jin (a Chinese measurement equal to 500 grams) has almost doubled from 2 yuan to 3.5 yuan in the last month."

The father of two is used to taking home roughly 3,000 yuan ($450) a month but explained things are getting so tight he could be forced to delay buying his younger daughter a new winter coat.

Under the pressure of high inflation, the State Council last week announced a package of measures to prevent further price hikes, including increasing supplies of vegetables and daily necessities, as well as offering subsidies to low-income families.

On Nov 19, China's central bank also raised the reserve requirement ratio (the amount commercial banks must hold in customer deposits) by 50 basis points for the second time in nine days.

"The recent moves by the Chinese government indicate the nation has realized the importance and necessity of normalizing monetary policy and suppressing high inflation," said Wang Tao, head of China economic research at UBS Securities, a global financial services firm.

By Ding Qingfen, China Daily
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(Editor:梁军)

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