The way Liang Xiaobin sees it, he's better off not selling kumquat oranges this week than putting them on his fruit cart at their current price, which he's sure his customers will only scoff at and refuse to pay. He said bananas might be the next item to disappear from his street stall in Beijing's Yong'anli neighbourhood if food prices in China continue to soar.
"I dare not sell them," the middle-aged fruit hawker said, explaining the absence of the popular "mandarin" tangerines from his cart. At eight yuan per half kilogram in the wholesale market, there was no point in him purchasing the oranges, Mr. Liang said, because no one would pay more than that for the fruit. "Everything is getting too expensive. … If this goes on, I'm afraid that people who earn 3,000 or 4,000 yuan ($607) a month soon won't be able to buy fruit."
As Mr. Liang suggested, kumquats and bananas aren't the only staples getting more expensive in China these days. A 10.1-per-cent jump in food prices last month drove overall inflation to 4.4 per cent in October, the highest level in 25 months and well over the government's annual target of 3 per cent.
For Beijing - grappling with inflationary pressures at home and disapproval over its monetary policies abroad - options are increasingly limited. The central government has already boosted bank reserves, raised interest rates, promised food subsidies, banned hoarding, and is hinting at possible lending controls.
But in a country where much of the populace remains poor despite rising levels of affluence, these moves have not been enough to curb growing discontent over rising energy, food and real estate prices.
At a vegetable stall near Mr. Liang's, the complaints were similar to his. Cabbage was too expensive. Ginger cost 8 yuan for 500 grams, more than double what it did six months ago. Garlic prices were through the roof. "The Chinese are getting richer? I'm afraid the Chinese can't get richer fast enough to keep up with these rising prices," opined the man running the vegetable cart, who gave only his family name, Zhang.
The ChinaHush blog calculated last week that 100 yuan now buys 30 fewer apples, 90 fewer eggs and 200 grams less cooking oil than it did in November, 2009. There have been reports of people clubbing together to buy their food in bulk in an effort to get lower prices.
Even McDonald's Corp. has been hit, with the hamburger chain - which is popular among China's middle-class youth - announcing an 8-per-cent hike in the cost of a Big Mac at its outlets across China.
The rising cost of food has sparked grumbling in the grocery aisles and growing concern among those who govern China's 1.3 billion people. With most families spending half their income on food, the ruling Communist Party has long kept a close watch on food prices, viewing them as a possible trigger for unrest.
Beijing has already promised to boost vegetable production, pay food subsidies to poor families and ensure fuel is available to farmers and truckers. The government has said it could go as far as imposing direct price controls, if necessary. "We will try to ensure their basic lives and minimize the impact of price rises," said Luo Pingfei, vice-minister of civil affairs.
The spike in food costs can be at least partially blamed on a year of extreme weather, with much of the growing season lost due to flooding in some parts of China's agricultural heartland, and droughts in others. China's Banking Regulatory Commission this week called on banks to urgently offer emergency support to the agriculture sector amid severe shortages of rice, corn, sugar, vegetables and other crops.
But there are also concerns that the country's broader economy may be starting to overheat after two years of growth fuelled by massive government stimulus programs. Money supply in China has increased 54 per cent over the past two years, leading to speculation and price bubbles throughout the economy. Real estate prices - already well beyond the means of the vast majority - rose by 8.6 per cent in October, the 17th consecutive month of increases.
This week, the government banned hoarding of oil and coal. "Illegal operators are using swindling, conspiring, price-fixing and hoarding to push up commodity prices," the cabinet's National Development and Reform Commission said in a statement.
The repercussions of China's rising food prices go well beyond Beijing dinner tables. Amid reports of food hoarding, the government has hinted it will curb lending in an effort to cap the amount of money available to speculators. "The government would not allow the same or more money to be pumped into the market as excessive liquidity has fuelled fears of rising inflation," said Wang Jun, a researcher with the China Center for International Economic Exchanges, in comments distributed Wednesday over the official Xinhua newswire.
Mr. Wang forecast the government might make between seven-trillion yuan and 7.5-trillion yuan available for new loans in 2011, compared with 9.6-trillion yuan in 2009 and 6.9-trillion yuan in the first 10 months of this year.
Hu Xiaolian, deputy governor of the People's Bank of China, suggested Wednesday that the central bank would use "price tools" - usually a reference to interest rates - to slow lending. The government has already raised interest rates once this month, and twice in the past three weeks has ordered banks to raise the amount of money they hold in reserves.
The China Business News reported Wednesday that the government may raise its inflation target to 4 per cent for 2011, but that goal might still be unrealistically low. Economists at Standard Chartered Bank forecast that China will experience 5.5-per-cent inflation next year.
Any steps Beijing takes to curb inflation could slow the overall economy - on pace to expand by an impressive 10 per cent this year - at a time when many in Japan, Europe and North America are hoping that China's growth could provide a badly needed boost to its trading partners.
With files from Yu Mei
Editor's Note: An earlier online version of this story and the original newspaper version of this story incorrectly stated the yuan price of tangerines and ginger. This online version has been corrected.Report Typo/Error