November 22, 2010

China boosts grain supplies to combat inflation

The Chinese government will increase grain supplies to meet people's needs and stabilise market prices, the nation's grain authorities said Friday (Nov 19).

The government will also sell a set amount of cooking vegetable oil and soy from its reserves beginning this week, in addition to the weekly policy-oriented sales of wheat, rice and corn that has already begun, the State Administration of Grain said.

The authority will also send groups of staff to major grain production regions to inspect and guide purchases of autumn grain and regulate business practices, according to the statement.

The move was in line with the government's efforts to protect farmers' interests and maintain moderate prices in the grain market, the statement said.

China's State Council, or the Cabinet, said Wednesday that it would impose temporary price controls on important daily necessities and production materials when necessary, and urged local authorities to offer temporary subsidies to needy families.

It also ordered efforts be implemented to ensure market supplies and strengthen market supervision.

These steps were introduced after China's consumer price index (CPI), a major gauge of inflation, rose to a 25-month high of 4.4% in October. The increase was mainly pushed up by the 10.1% surge in food prices, which accounts for one-third of the basket of goods used to calculate the country's CPI.