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Food prices prompt watch on inflation

By Xu Binglan, Xie Chuanjiao and Qin Jize (China Daily)
Updated: 2006-12-12 08:35

China's food price rises have been fuelled by investor enthusiasm in biofuel production, particularly in the making of ethanol fuel, according to Xu Weiping, an information officer with the Ministry of Agriculture.

There has been a rising demand for grain as an industrial material in spite of the nation's good summer and autumn harvests, according to NBS grain output reports.

The FAO report said the world's rising cereal prices were due to a growing demand for biofuel production and poor harvests in some countries.

Commenting on China's role, A. Abbassian, an FAO commodity analyst, told China Daily that China's selling or buying will "have a great impact" on the world's food prices.

If China had exported more corn to the international market, the world price would not have risen so high, Abbassian said. While in wheat, by not having significantly increased its imports, China has helped the world price remain stable.

(China Daily 12/12/2006 page1)