Flood destruction to fuel inflationary pressures

Flooding across eastern, southern and southwestern China has killed at least 175 people and done extensive damage to crops, adding upward pressure to food prices even as the government struggles to rein in inflation, the Wall Street Journal reported. In the worst-hit areas, particularly in the eastern province of Zhejiang, flooding has decreased crop yields by about 20% from a year earlier, pushing grain and vegetable prices higher. More than 432,000 hectares of crops have been destroyed in flood-affected provinces around the country. Vegetable prices are likely to continue to increase or remain high for about two weeks, said Jin Changlin, a Zhejiang agricultural official. In addition to the 175 known deaths, 86 people are missing and around 1.6 million people have been driven from their homes by the flooding, which had caused more than US$5 billion in damage as of Monday, according to an announcement by the Ministry of Civil Affairs. Heavy rains began earlier this month and are expected to continue in a number of flood-battered provinces. In May, food prices rose 11.7% compared with one year earlier, more than twice the 5.5% increase in the overall consumer price index.