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Grain - Inflation

BEIJING: Floods and other natural disasters are hurting China's grain output, the government said Monday, raising the prospect of higher food prices with inflation already at uncomfortably high levels.

"Agricultural production is facing various problems, including flooding, drought, typhoon, plant diseases and insect pests," the agriculture ministry said in a statement posted on its website.

"Stabilising the autumn grain supply is a big challenge."

"A decline in grain production will drive up food prices," Sealand Securities analyst Yang Yongguang was quoted as saying.

The warning comes after the government released data last week showing that inflation rose 4.4 per cent in June, and 3.2 per cent in the first six months of the year, with food prices among the biggest drivers.

Food prices have jumped 7.6 per cent in the first half of 2007. - AFP/ac