Guangdong's consumer price index (CPI), a major gauge of measure inflation, rose by 3.2 percent in August from a year earlier, a new record high so far this year, mainly due to rising food prices. Food prices, which account for about one third of the weighting in calculating the CPI, saw a growth of 6% year on year in August.
People are complaining about the increase in food prices: " Food for a day, which cost 7.5 USD before now will cost 10 USD now. That means that money which used to last a whole month now only lasts 20 day."
Ma Guangyuan from the China Academy of Social Sciences said the excessive currency liquidity is the main reason behind the growth in CPI.
" To be honest, our food supply is enough to satisfy the demand. But the reason food prices are increasing must be related to the currency. In such a situation, there is no reason not to resort to increasing interest rates. "
