CHINA EXPERIENCING PROBLEMS TAMING INFLATION

From The New York Times:

Consumer prices unexpectedly surged again last month in China despite price controls on a wide range of industries, and this month holds the prospect of even higher inflation.

For years, flat or falling prices for Chinese goods helped restrain inflation in the United States. But now rising costs for American imports from China are complicating the task of the Federal Reserve. The Fed has been cutting interest rates to help weak housing and credit markets in the United States, but has been wary that low rates might permit inflation to creep back into the economy.

Prices were 6.5 percent higher in October than a year earlier, accelerating from 6.2 percent in September, China’s statistical agency announced on Tuesday. The October inflation rate matched an increase of 6.5 percent in August, China’s highest inflation rate in nearly 11 years.

Rising prices are an especially dangerous problem for China, where public acceptance of one-party rule depends to a considerable extent on ever-rising prosperity. With food prices increasing the fastest — they were up 17.6 percent in October from a year earlier — many poor and working-class families are struggling to make ends meet.

Just this past Saturday in Chongqing, people began lining up before dawn when a Carrefour store offered a discount on large jugs of cooking oil, an essential for a lot of Chinese cooking. When the doors opened, a stampede ensued, killing 3 people and injuring 31. China’s commerce ministry responded on Monday by ordering a ban on limited-time sales promotions.