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Food cost hike raises Shanghai's CPI to 5.9%
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Shanghai's consumer prices continued to accelerate by posting a 5.9-percent increase in January, fueled mainly by food costs, said the Shanghai Statistics Bureau yesterday.

The growth was slower than the national average of 7.1 percent, but 0.5 percentage point faster than the city's figure in December which settled at 5.4 percent.

"The rise of food prices remains the main driver of the city's CPI growth," said Liu Hui, an official with the bureau.

Last month, food prices in Shanghai jumped 14.9 percent from a year earlier, contributing 4.9 percentage points to the overall index growth.

In sub-categories, the cost of edible oil climbed 34.1 percent year on year, growing for the ninth straight month, while vegetable prices rose 12.9 percent from a year earlier.

"Oil prices were boosted by increased demand during the Spring Festival and higher prices on the international market," said Liu. "Vegetable price increases were mainly due to the unexpected snowstorms," Liu added.

To stabilize food prices, the city's government has helped farmers to replant vegetables after the snowstorms and offer them more subsidies to cover the losses.

Unlike previous analysis which said inflationary pressure was confined to food sectors, more products saw their costs rise last month except for traffic and telecommunications, entertainment and education.

"It is worthy of attention that inflation is spreading into other parts of the economy than food," said Li Maoyu, an analyst with Changjiang Securities Co.

The costs of clothes grew 1.4 percent year on year in January, household appliances jumped 6.6 percent while house rentals increased 6.2 percent, the bureau said.

(Shanghai Daily, February 26, 2008)

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