City anxieties are mounting that the global flood of ultra-cheap Chinese exports may be ending, threatening to stoke inflation and make it harder for the Bank of England to cut interest rates to bolster a vulnerable economy.

Growing numbers of economists are sounding warnings that rising cost pressures and wages in China mean that it may be starting to export inflation. Analysts fear that the era when Britain and other big Western economies could depend on steadily falling prices for Chinese imports to keep a lid on inflation and allowing their economies to grow faster without sparking price pressures, is ending.

The threat of a new wave of China-fuelled inflationary pressures has been thrust on to the agenda by official US figures, not previously available, which show that after years of steep falls, the cost of Chinese exports to America began to rise very sharply last year.

The very steep gains in America’s Chinese import bill were fuelled as sharp falls in the dollar cut US buying power abroad. But City economists are now increasingly concerned over signs that the same price pressures from dearer Chinese imports are emerging on this side of the Atlantic. With China also pricing many of its goods for export in dollars, and the pound now tumbling against the US currency, the inflationary threat to Britain could be magnified.

“Given the recent sharp decline in the pound, China will be much less disinflationary going forward than has been the case to date,” said David Owen, European economist at Dresdner Kleinwort, the investment bank.

Until now, the low cost of Chinese exports has been a crucial factor in driving down the price of goods such as clothing and footwear, and household appliances, on the high street. Official inflation figures suggest that this benign trend has begun to reverse, however.

Although prices for clothing continue to fall year on year, the annual pace of their decline has slowed to as little as 4 per cent from more than twice that in the early part of this decade. Even this is enough to put upward pressure on overall inflation.

At the same time, the cost of household electrical products has been climbing during large parts of the past two years, having previously been falling year on year from at least mid1990s until 2006.

Will Adderley, chief executive of Dunelm, the home furnishing group, said: “There have been years of deflation on the high street but the feeling is that that now may be ending. There’s some headline inflation rolling towards us.”

Fears over China’s inflationary effect are being increased by the likelihood that its huge appetite for energy and raw materials will keep commodity prices at record levels, even as Western economies slow.

“China is going to be the source of relentless demand growth in all major commodities in the years ahead,” said Richard Savage, head of energy research at Mirabaud. But with global crude prices exceeding $100 for the first time last week and high prices for energy commodities, Chinese manufacturers are feeling the strain and are increasingly being forced to pass on excess costs to customers.

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