China inflation hits 11-year high

Food prices are rising due to rising demand and inadequate supply

Chinese inflation hit an 11-year high in January after rising price pressures were exaggerated by fierce snow storms, official figures show.

Soaring food prices were largely blamed for pushing consumer inflation up to 7.1% last month, from 6.5% in December.

Inflation in China continues to rise despite higher interest rates and other measures by Beijing to keep the economy from overheating.

The worst winter for decades hit food supplies, sending food costs up 18%.

Massive snowfalls wrecked crops and killed millions of livestock.

But analysts cautioned that the severe weather was not the only factor behind rising food costs, and warned that prices could still increase further.

Unrest

January's inflation rate of 7.1% was the highest figure since September 1996, when consumer price inflation hit 7.4%.

Non-food inflation rose only slowly, hitting an annual rate of 1.5%, the figures showed.

Chinese leaders have been under pressure to control spiralling food costs, the biggest factor behind historical periods of social unrest in a country where according to the World Bank 300 million people live in poverty.

Measures taken by the government include giving farmers incentives to rear more pigs.

Last year, the government also raised interest rates six times in an attempt to keep inflation under control.

Analysts said in light of the latest figures they expected further interest rate rises.