The fundamental cause for rising food prices are the soaring housing prices, according to Yin Zhongli, official from the State’s think tank, the Institute of Finance and Banking, which is under the domain of the Chinese Academy of Social Sciences.
He suggested, “Bad weather and international markets may have touched off the food price hike but the fundamental cause is soaring house values. Even when the weather improves, inflation is unlikely to improve. Housing prices driven by inflation are emerging.” He warns that if the housing prices remain unchanged, wages may double.
“Unless the authorities provide low-income housing, the housing prices driven by inflation will persist for a long time.”
Source: Caijing, August 30, 2010