Wen Jiabao, the Chinese Prime Minister, used his annual state of the nation speech yesterday to set out how Beijing would try to prevent rising prices emerging as a focus for social unrest.

Mr Wen, laying out priorities for the year as he opened the annual session of the National People's Congress, did not shy away from detailing the risks posed by inflation to China's social fabric and to the double-digit growth that has transformed the country into the world's fourth-biggest economy.

“The current price hikes and increasing inflationary pressures are the biggest concern of the people,” he said. Economic growth and inflation were repeated themes of his long speech, highlighting government worries that rising prices could undermine the growth that reinforces the Communist Party's hold on power.

Mr Wen set a goal for inflation of 4.8 per cent this year, the level reported in 2007 when prices began to race out of control and beyond the 3 per cent target set by Mr Wen last year.

The Government may miss this target, too. Annual consumer inflation hit an 11-year high of 7.1 per cent in January amid signs that pressure on prices was spreading from food to other parts of the economy.

Inflation is a particular source of anxiety for the Communist Party, which fears the instability that could be fuelled by rising prices. Inflation has been largely absent in the past decade, but periodically has plagued China's 30-year march towards free markets. Worries about food and housing costs were among the factors that inspired the 1989 demonstrations centred on Tiananmen Square.

Families across China were shocked by surging prices last year. Mr Wen indicated that price increases would not ease yet. “Factors driving prices up are still at work,” he said. In January, cooking oil prices rose 37.1 per cent while pork - cited as a significant driver of inflation in the second half of last year - soared 58.8 per cent.

Mr Wen heads an administration acutely aware of widening unhappiness over rising prices. He vowed to implement measures such as extending price controls on some foods, petrol, electricity and other scarce goods and resources. Subsidies to farmers would be increased to encourage them to grow more food, and curbs imposed to reduce investment in factories, land and other fixed assets that are driving up demand.

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