July 25, 2012

China's grain prices to hike on US drought

Following the rise of global grain prices due to the US drought, the grain prices of China will possibly increase, resulting to a recovery in consumer inflation.

The ongoing drought in the US, the largest grain producer in the world, would drag down US grain output and thus global grain supply, driving up grain prices on the international market, Ma Wenfeng, a senior analyst at Beijing Orient Agribusiness Consultant, told the Global Times.

Even if the rise of the prices on the international market stabilises at 20%, the increase of consumer prices caused by rising international grain prices will push up China's consumer price index (CPI) by between 0.7 and 1.5 percentage points, thus causing a rebound in inflation in a short term, the newspaper reported him as saying.