5/11/2008 10:24:59 PM

China's inflation rebounded in April to near decade-high levels, adding to pressure on Beijing to cool rapid price rises and avert possible unrest ahead of the Summer Olympics, according to official data reported Monday.

Consumer prices in April were up 8.5 percent compared with the same month last year, the National Statistics Bureau reported. That was up from March's 8.3 percent rate and just short of February's 8.7 percent, the highest inflation rate in nearly 12 years.

Prices have jumped since mid-2007, driven by rises in food costs that hit 22.1 percent in April. The government has been trying to cool price rises for pork, grain and other items by increasing supplies and has imposed price controls on basic goods.

"We believe the April inflation data suggests that it is still far too early to claim success in the battle against inflation," Goldman Sachs economists Yu Song and Hong Liang said in a report to clients.

Soaring food prices are especially worrisome to Beijing because they hit China's poor majority hardest.

There have been no reports of demonstrations, but bouts of high inflation in the 1980s and '90s set off protests _ an embarrassment that communist leaders want to avoid ahead of August's Beijing Olympics, which they hope will showcase China as a prosperous, stable society.

April's 22.1 percent rise in food costs was fueled by a 68.3 percent jump in pork prices, 46.6 percent in that of cooking oil and 13.6 percent for fresh vegetables.

A senior economic official, Vice Premier Wang Qishan, said Friday that Beijing will stick to tight monetary policies to prevent inflation from escalating. But he announced no new initiatives.

Beijing is trying to cool a boom in lending and investment that it worries could fuel broader inflation. It has raised interest rates repeatedly over the past two years to cool borrowing and tried to curb credit growth by forcing banks to set aside more reserves.

Prices began to rise in mid-2007 as China ran short of pork, grain and some other basic goods.

The government has assured the public that China has enough grain and is paying farmers to raise more pigs. But efforts to boost food supplies were hampered by China's most severe winter storms in decades, which wrecked crops and disrupted shipping.

The sharpest inflation has been limited to food but the costs of raw materials and energy are edging up, raising pressure for producers to pass on rising prices to consumers.

Producer prices rose 8.1 percent in April, driven by rising energy costs, according to the government.

___

On the 'Net:

National Bureau of Statistics (in Chinese): http://www.stats.gov.cn