China consumer inflation rebounds in October

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BEIJING, Nov 13 (Reuters): Soaring food costs drove up China's inflation in October, reinforcing expectations that the central bank will raise interest rates again before long to keep a lid on price pressures.
Consumer price inflation quickened to 6.5 per cent in October, matching the near 11-year peak scaled in August, from 6.2 per cent in September, the National Bureau of Statistics said Tuesday.
"Definitely, this increases the possibility of an imminent rise in interest rates," said Xue Hua, an analyst with China Merchants Securities in Shenzhen.
Xue said the People's Bank of China, which has raised rates five times so far this year, could act as soon as this week.
Economists polled by the news agency had expected an inflation rate of 6.4 per cent, although market traders had been whispering for days that the outcome would be 6.5 per cent.
Inflation was last higher in December 1996, when the rate was 7.0 per cent.
Goldman Sachs promptly ratcheted up its full-year inflation forecast to 4.8 per cent from 4.5 per cent. For 2008 the investment bank now expects prices to rise 4.5 per cent instead of 4.0 per cent.
"We believe the central bank will likely respond with additional tightening measures including strict control on bank lending and two more rate hikes before the end of this year," Goldman economist Yu Song said in a note to clients.
Non-food prices rose just 1.1 per cent in October from a year earlier, the same pace as in September. But food prices soared 17.6 per cent, with vegetables up 29.9 per cent and food oil up 34 per cent.
Price concerns were linked to a stampede at a store in southwestern China Saturday. Three people were crushed to death when shoppers rushed into a Carrefour supermarket that had a special discount on cooking oil.
Rising inflation has also been a recipe down the years for social unrest in China.