Chinese inflation shot to its fastest rate in 11 years in February as food prices continued to climb due to bad weather.

Consumer prices rose 8.7 per cent last month, accelerating from 7.1 per cent in January, China’s statistics bureau said today. Economists surveyed by Bloomberg had expected 7.9 per cent.

Food costs soared 23 per cent after the worst blizzards in half a century destroyed crop and disrupted transport links.

Record inflation figures came as the cost of a barrel of US light sweet crude hit $108, as investors continued to pile into commodities.

Higher prices led to further calls for an interest rate rises from economists.

But Sun Mingchun, an economist with Lehman Brothers in Hong Kong, told Bloomberg: “A rate hike does not help to increase the supply of food or the supply of pork.”

The Government raised interest rates six times last year, pushing lending rates to a nine-year high of 7.47 per cent, in an attempt to cut inflation to its 2008 target of 4.8 per cent.

China said that it needed to stay calm and take effective measures to control inflation but conceded that the task would be made more difficult due to the storms.

The government has ordered food companies to seek approval before any price increases and also required banks to hold more cash in reserve.

Despite these efforts pork prices have soared 63 per cent, vegetables are up 46 per cent, and edible oil rose 41 per cent, squeezing household budgets.

Non-food inflation was 1.6 percent, up from 1.5 percent in January. Excluding food and energy, prices rose 1 percent.

Economists believe China may raise rates later this week but they are split as to whether it will actually curb price rises.

Chinese stocks fell on speculation that a rate rise could dent earnings, with the CSI 300 Index falling 1.1 per cent in Shanghai.

Explore Economics

• Autumn Budget 2007

• Budget 2008

• World Economic Forum

• The Times MPC

Times Recommends

• Brown targets fat cats after nationalising banks
• US shares soar on global banking rescue
• Europe follows Brown to head off meltdown