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China's worst floods to weigh on food prices

All Headlines 12:00 June 22, 2011

By Kim Young-gyo

HONG KONG, June 22 (Yonhap) -- China's worst floods in decades will likely add upward pressure to rising food prices, further fueling already high inflation in the world's No. 2 economy, government officials said Wednesday.

China's consumer prices rose 5.5 percent in May from a year earlier to a 34-month high due to soaring food costs, partly driven by unfavorable weather conditions across the country. China's inflation gauge grew more than 5 percent for the third straight month, higher than the government's annual target of 4 percent.

Weeks of serious flooding caused by long-lasting torrential rains across southern China have left huge areas of Hubei and Zhejiang provinces under water, with more than 432,200 hectares of farmland inundated. At least 175 people are dead and 86 are missing, the Chinese government said earlier.

Agricultural officials in the eastern coastal province of Zhejiang said output of vegetables there has so far been reduced by 20 percent compared to a year earlier due to the flooding.

"Vegetable prices will likely continue to increase or remain high for about two weeks," said Jin Changlin, a government official in Zhejiang province.

Food prices led the overall CPI growth last month, jumping 11.7 percent on-year. They rose at a double-digit pace for the fifth consecutive month, contributing 65 percent to overall inflation.

Continued downpours follow a severe drought that earlier hit central China along the Yangtze River for about 200 days. The worst drought in four decades affected more than 1.3 million hectares of farmland across seven provinces, which serve as the country's major agricultural producers.

Heavy rain is forecast to batter most parts of Anhui, a neighboring province of Zhejiang, from Wednesday to Friday, the provincial meteorological bureau predicted.


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