Inflation has come back at a ferocity unseen in more than two years, ominous for the government's efforts to rein in price rises and placate a blistering mass upset with a growing income gap.
China's currency, the yuan, rose in value on Thursday as the central bank set the mid-point of the U.S. dollar's daily trading range at 6.6242 yuan from 6.6450 yuan, a record high since 1993.
The move, together with the bank's overnight decision to raise the required reserves for all the lenders, is seen as the government's resolve to control rising inflations, which has eroded people's purchasing ability.
China's consumer prices rose at the fastest pace in more than two years, the National Bureau of Statistics reported on Thursday. The nation's consumer price index -- or CPI, a key measure of inflation -- rose 4.4 percent year-on- year in October, compared with 3.6 percent in September. Consumer prices increased 0.7 percent month-on-month.
The rise was the steepest since September 2008 -- the start of the global financial crisis when consumer prices rose 4.6 percent. The bureau also said PPI, producer price index, rose 5.0 percent in October year-on-year.
Analysts have estimated the same level of price rises for November and December.
The bureau said that the CPI for the first 10 months of the year was up three percent, mainly driven by rising food prices and living costs, its spokesman Sheng Laiyun told a news conference in Beijing. "Price pressures are increasing. That means pressure on macroeconomic controls is increasing," he said.
The surge in CPI is out of most of analysts' expectations, triggering renewed speculation that the central bank will raise interest rates again this year. Last month, it raised rates by 25 basis points.
According to official statistics, new lending in October fell slightly from the previous month to 587.7 billion yuan.
China's battle to keep prices in check comes amid worries that the US Federal Reserve's move to inject $600 billion dollars into the American economy could increase speculative hot money flows into China and fuel inflation.
"The new round of foreign quantitative easing policy will release enormous liquidity, which will have a rather significant impact on the Chinese economy," Sheng told reporters. The Fed measures were expected to fan further inflation in China, he said, adding: "We will have to make greater efforts in order to reach the full-year inflation target."
The head of China's top economic planning agency, National Development and Reform Commission chief Zhang Ping, warned earlier this week that the full-year CPI would exceed the government's 3 percent target.
Industrial output from China's factories rose 13.1 percent on year, but slower than September's 13.3 percent rise. Retail sales, a key measure of consumer spending, rose 18.6 percent year-on-year.
