China’s inflation rate reached the highest level in more than a decade in November, while the country’s trade surplus continued to soar.

The government said the country’s consumer prices — a key indicator for inflation — went up 6.9% compared to a year earlier. This is the highest inflation level since December, 1996.

Andrew Freris, chief economist for the Asia Pacific region at BNP Paribas Bank in Hong Kong, says the reason the consumer price index was so high in November was not a further increase of food prices. Rather, he says, the government had raised state-set prices for diesel and gasoline by 10% in an effort to curb demand amid a fuel shortage.

He said, ‘Meat prices are now stationary in the sense that they stopped accelerating and I expect that the December prices will show that they are now coming down.’

And he expects the inflation rate to come down to about 5% in December.

Inflation has surged in recent months — mainly because of double-digit increases in food prices especially of pork, China’s staple meat. This is due to shortages after a disease killed millions of pigs and because of the rising cost of feed grains.

China’s trade surplus, meanwhile, remained high in November, totaling more than $26 billion.

The numbers suggest that the demand for goods made in China remains strong, despite mounting worries over product safety and several recalls by foreign toy companies this year.

The country exported goods worth more than $117 billion — up 22% from the same month last year.
Source: China Confidential