MercoPress. South Atlantic News Agency

Inflation at its highest level in three years; concerns over food prices and social unrest

Prices in June rose to 6.4% over a year ago

Inflation in China has risen to its highest level for three years, despite a series of interest rate rises and curbs on bank lending. Prices in June rose 6.4% from a year earlier, well above the rate for May.

Analysts say Chinese authorities are concerned that the rising cost of basic foodstuffs could fuel social unrest. The price of pork - a staple of the Chinese diet - has reached a new high, while crop-growing regions have been hit by severe flooding.

The Chinese government has made tackling inflation its top priority and interest rates have been raised three times this year.

Many economists expect China's inflation to cool in the second half of the year as world oil prices ease. However, they are watching for evidence that higher costs are filtering into a broader swathe of the economy.

A report from China's CCBIS bank released earlier suggested that inflation would peak at 6.2% in June. Earlier this month, Premier Wen Jiabao promised that pork prices would begin to fall in the coming months.

“With the implementation of government measures, price rises will be curbed effectively,” he said during a visit to a market. Pork prices in the last nine months have risen 50%.