Amid growing inflationary concerns, the Chinese Ministry of Agriculture announced Tuesday it would issue monthly reports on agricultural product prices to increase "market transparency and offer guiding information for farmers".

"The fluctuations of agricultural products are closely related to the overall performance of the national economy," Gao Hongbin, vice minister of agriculture, told reporters.

"They also affect the interests of both producers and consumers."

Rising farm product prices have done little to benefit farmers, the minister said, with most of the gains going to those who process, deliver, sell and consume the products.

He said domestic prices were increasingly influenced by global markets, whose influence could be transmitted to China through imports and futures exchanges.

Global wheat stocks are the lowest since 1976 and supplies of other major agricultural products are also tightening.

Driven by high grain and pork prices, China's consumer price index, a key barometer of inflation, rebounded to 6.5 percent in October, up from 6.2 percent in September to match the 11-year monthly record in August.

"There is a strengthening correlation between prices of agricultural products and other primary commodities such as oil and coal," said Gao,

Oil prices recovered Tuesday from an early slide as the U.S. dollar hit a new low against the euro, attracting speculators who trade oil futures using other currencies.

Light, sweet crude for January delivery was 95.60 U.S. dollars per barrel in electronic trading on the New York Mercantile Exchange at midday European time.

Zhu Hongren, a deputy department director at the National Development and Reform Commission (NDRC), said high crude oil prices have already put pressure on production materials, which in turn could drive up prices of industrial products and commodities.

Surging commodity prices are exerting mounting pressure on inflation, Zhu warned ahead of the release of October inflation data.

First monthly report

During Tuesday's news briefing, Zhang Yuxiang, chief economist with the ministry, delivered the first monthly report on prices of major farm products including rice, wheat, corn, soybeans, oilseeds, cotton, sugar, pork and other meat, eggs, seafood, and produce.

She delivered the results of a survey that reviewed price changes of these products in October and forecast possible price discrepancies between domestic and international markets.

For instance, she said, domestic soybean prices showed steady growth in October, rising 7.7 percent from a month earlier and 72.6 percent year- on-year. In the same period, the world price approached a record high, increasing 56.2 percent year-on-year to 376 U.S. dollars a ton in futures trading on the Chicago Mercantile Exchange on Oct. 30.

The full text of the report is available on the ministry's Website (www.agri.gov.cn)

Inflationary risks

A report by the Bank of China warned that inflationary risks would extend to non-food sectors, which are under considerable pressure from increasing resource costs.

Faced with worsening fuel shortages, China has raised gasoline, diesel and jet fuel prices by nearly 10 percent. However, its wholesale gasoline prices are still below the international average (about 76 U.S. dollars a barrel compared with the international average of 102 U.S. dollars)

Transportation expenditures are expected to lead a significant rise in non-food prices in November and December, said the report.

The bank suggested restrictions on food, energy and commodity exports would help curb overall price hikes. However, it said, a sharp rise in the value of the yuan, which has been advocated by China's major trading partners, would be "unrealistic" because the gap between domestic and international prices was "relatively big".

Consumer prices for non-food items rose 0.35 percent month-on-month in October, compared with a 0.25-percent monthly rise in September.

Market observers said the government would continue to use tightening measures such as interest rate hikes to rein in excess liquidity.

This contention was echoed by central bank governor Zhou Xiaochuan, who said there was "considerable room" for further hikes in the reserve ratio, another tightening weapon.

Government concerns

With inflationary risks increasing, Chinese Premier Wen Jiabao said earlier this month that the government would take further measures to stabilize prices to maintain market and social stability.

"Prices have been on the rise these days and I'm aware that even a one-yuan increase in prices will affect people's lives," said Wen during a visit to some needy citizens in the Dongcheng District of Beijing.

Wen said the government would boost investment in farm infrastructure construction and increase direct subsidies to farmers to maintain grain acreage and encourage planting of oil crops and vegetables.

He also pledged comprehensive measures to expand crude oil production and refining capacity to guarantee supplies of oil products.

The premier also called for stepped-up market monitoring to clamp down on price-rigging and maintain normal market operations. He added that the government would raise retirees' pensions and hike minimum allowances for needy residents. It would also continue to subsidize school canteens and public transport.

"Only when people's quality of life is improved will we feel reassured and believe we did a good job," he said.  (One U.S. dollar equals to 7.43 yuan)