China's leaders are determined to avoid a replay of the late 1980s when spiralling inflation fuelled widespread public discontent and protests.

 

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

"Greater prominence needs to be given to curbing inflation and controlling price rises," China's national bureau of statistics said on Monday in a statement accompanying the inflation data.

 

Food prices, which make up a third of the consumer price basket used to calculate China's inflation levels, have been the overwhelming driver of inflation.

They rose 22.1 per cent in April from a year earlier, though weekly government reports on fresh food prices showed a slight dip in May.

Non-food prices rose 1.8 per cent in April from a year earlier, the same as in March.

Zhou Xiaochuan, China's central bank governor, said on Saturday that the country would give precedence to tackling inflation over targeting growth or employment.

The government declared it would tighten monetary policy this year to fight inflation, but it has yet to raise interest rates after six increases in 2007.

China's approximate 130 million migrant
workers are vulnerable to rising prices [EPA]

Meanwhile, the government also reported on Monday that China's trade surplus fell about 1 per cent in April from the same time last year to $16.8bn amid weaker global demand for Chinese goods.

The trade surplus with Europe jumped by 34.8 per cent to $12bn while that with the US saw much slower growth, rising by 4 per cent to $13bn, according to the Chinese customs agency.

The growing Chinese trade gap with the 27-nation European Union has prompted the EU to join Washington in lobbying Beijing to ease currency controls and import barriers.

The surge in exports to Europe is due in part to the rise in the euro against China's currency, the yuan, which makes Chinese goods more attractive to European consumers.

 

The dollar, by contrast, has fallen against the yuan, making Chinese goods more expensive for Americans.