Consumer prices in China pushed to ten-year high, low-income households feel pressure

Posted by Reading Time: 2 minutes

By Andy Scott

SHANGHAI, Nov. 14 – The National Bureau of Statistics announced yesterday that China’s consumer prices in October reached the highest rate in more than a decade, driven mostly by skyrocketing food costs.

Compared to a year earlier, the Consumer Price Index jumped 6.5 percent in October, equal to August which also saw a 6.5 percent bump. It is the highest rate since a seven percent hike recorded in 1996.

The growth in October followed a rise of 6.2 percent in September. The ten month CPI average is 4.4 percent according to the statistics bureau.

Rising food costs have been the main cause of rising prices, especially the cost of pork and cooking oil which have seen massive price fluctuations – pork up 54.9 percent October, cooking oil up 34 percent. While the government says that these price increases remain in line with the country’s economic growth, the impact on the lower-income families and individuals is going to become increasingly heavy.

In countries where those who govern elected by the governed, soaring price increases of consumer goods – gasoline in the oil hungry United States for example – often leads to leadership changes. A change in leadership is often only a temporary solution at best, and macro-economic factors that lead to soaring prices are often out of the hands of the governing elite to control, but a change is panacea to the masses. It is a chance for the average person to feel like they have some control over forces that are uncontrollable, yet have so impacted their lives.

In countries where those who govern determine who governs, the results of soaring consumer prices is panic, anger and resentment over not being able to feel like one is in control of a situation that so impacts daily life. In Burma, the protests that set the ruling junta into panic earlier this fall started not over a call for greater democracy or liberalization, but because the cost of fuel

In Chongqing last Saturday, three people died and 31 were injured in a stampede at a Carrefour outlet when the store launched a three-day promotion to celebrate the 10th anniversary of the outlets arrival in the city by discounting a brand of cooking oil by RMB11.5. A tragic event that highlights a multitude of problems, most of which are not being addressed in the aftermath.

This is not simply an example of bad crowd control and poor preparation by the French chain’s management. The central government’s knee-jerk reaction to ban all sales promotions with a limited quantity of promoted items during a limited time period will not fix the larger issue.

We have not seen the end of the inflation, and as the price of staple commodities continue to rise in China, so to will the anger and frustration of everyone who has been left behind by the country’s economy. Visiting poor communities to pay lip service to the problem as Premier Wen Jiabao did on Sunday will then not be enough to calm the average person.