"It would be interesting to know, if what is described in here is also experienced by your relatives in Beijing, especially the dramatic increases as mentioned in this article."

Eoin Treacy's view Thank you for this interesting article. Here is a relevant section which may be of interest to subscribers:

Officially, China's consumer price inflation topped out at 3.3 percent in July compared to a year before, a 21-month high. Officials say the spike is a one-off caused by crop damage from recent flooding. Other costs, they say, such as cars, mobile phone bills, and clothing, are falling, and pressure on prices should ease as the economy cools. At an Aug. 12 press conference, Pan Jiancheng, a deputy director in the statistics bureau, said the inflationary threat was "overhyped."

Consumers, investors, analysts and academics interviewed by Bloomberg BusinessWeek in its Aug. 30 issue beg to differ.
"There has been a jump in prices that isn't reflected in the numbers," said Chinese Academy of Social Sciences economist Yu Yongding, a former adviser to China's central bank.

Michael Pettis, a finance professor at Peking University, said he wonders how a country that grew 10.3 percent last quarter and is seeing upward pressure on wages could register a price rise of a few percentage points. Multinationals in China expect to raise wages an average of 8.4 percent this year, according to Hewitt Associates Inc., a human resources consultant.

We observed that prices had risen when we visited China this summer and it wasn't simply an issue of the Pound having fallen against the Yuan over the last couple of years, but certainly not to a multiple of where they were before. Most people we talk to have experienced a rapid improvement in their standard of living over the last decade which has far outstripped inflationary pressures.

Any comment on Chinese statistics has to be predicated on the unreliable nature of such proclamations in a communist system with no opposition or series of checks and balances. However, while inflation may be somewhat understated, this is hardly unique to China. The monetary authorities have a difficult path to tread between containing the surge in housing prices, the difficulties in the manufacturing sector and the need to normalise policy following the record stimulus.

India's higher inflation following last year's poor monsoon is now moderating on this year's more positive rains. China has experienced flood damage in the south west and extremely hot weather in the north which has damaged some crops but the national harvest has not been disastrously affected and China has significant stockpiles which should help to contain price pressures to some extent. Given the considerable negative pricing pressures in the manufactured goods sector, including Autos, I suspect the general thrust of moderating inflationary pressures is not too wide of the mark.

If we look more at what the authorities have been doing rather than what they are saying I suspect we will have a better indication of the real pace of inflation in the country. The Yuan is being allowed to appreciate once more and tightening measures, although focused on the housing market, have been in place for much of the year. These measures indicate that the authorities are not unaware of the threat posed by inflation and have been actively moving to contain it before it becomes a more pressing threat.