January 9, 2008 / 3:39 AM / 12 years ago

Soaring wine prices dampen Chinese New Year cheer

BEIJING (Reuters) - Chinese consumers, already rocked by soaring food prices, face a bigger premium to drown their sorrows over Chinese New Year, as top wine producers hike prices for both high-end liquor and basic plonk.

China’s surging price rises have leapt to the top of leading officials’ worries, according to a survey last month that showed inflation overtaking corruption and inequality as the country’s number one social problem.

Gu Yue Long Shan Shaoxing Wine Co Ltd, a rice wine producer, told the Shanghai stock exchange on Wednesday that it would raise prices across several categories of rice wines before the Year of the Rat starts on February 7.

Steep price hikes in other top liquor brands, including Maotai, a top traditional spirit produced by Kweichow Moutai, have been noted by suppliers and consumers.

“Every year liquor prices rise before Spring Festival (Chinese New Year), but the rises this year are uncommonly high,” a financial newspaper posted on the People’s Daily Web site (www.people.com.cn) said.

“The main reasons are that grain, coal and shipping costs have risen substantially, according to suppliers.”

Apart from China’s fiery top-end liquors, often exchanged as gifts during the Lunar New Year holiday, more humble brews like beer have also been hit. National brewer Tsingtao Brewery Co Ltd has hiked prices in several categories, the China Daily said.

“The price hike covers only a few categories, and there will probably be another increase after the Spring Festival,” the paper quoted spokesman Yuan Lu as saying.

Soaring food prices, in particular for the country’s staple meat pork, have largely driven annual consumer inflation to hit an 11-year high of 6.9 percent in November.

Rising costs of agricultural inputs such as oil and grains, along with increasing labor costs and rapid urbanization, have dented government attempts to control food prices.

China, which has promised subsidies to encourage farmers to increase the supply of pork and other farm products, on Wednesday moved to ensure budget-weary consumers it could keep food prices in check.

“I trust that the increase of supply ... will be able to ensure relatively stable prices,” Gao Hongbin, Vice Minister of Agriculture, told reporters.

But at street level, consumers are feeling the pinch.

“Prices of everything are going up, especially pork and anything made from wheat,” lamented Gaby Yang, a Beijing housewife.

Yang said grocery prices of bread products had soared 25 percent and milk about 20 percent in the months leading up to Spring Festival.

“Some price rises are really unreasonable.”

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