On December 11 2010， Na- tional Bureau of Statistics(NBS) released that the consumer price index (CPI) rose 5.1 percent in November compared with the same month in 2009; it was the sharpest increase in three years. Chinese planners had hoped that the average of the index for the year would not go above 3 percent， but that looks virtually impossible now. Consumers have been especially hard hit by soaring food prices.Food prices were a major driver of November’s inflation， rising 11.7% from a year earlier， faster than October’s 10.1% rise. But nonfood price inflation also accelerated， rising 1.9% from a year earlier after October’s 1.6% rise， and other indicators of economic activity also picked up， in a sign that inflationary pressures could be spreading outside food.On December 15， 2010， the Chinese Academy of Social Sciences(CASS)， a research organization in Beijing， reported that high inflation and housing prices had contributed to a deepening sense of popular disaffection.Commodity prices were the main concern of urban residents， followed by health care and housing prices， according to the findings. Job satisfaction among those surveyed was at its lowest in four years， according to the academy.Also on December 15， 2010， the central bank said that satisfaction among people with the current level of prices had dropped to an 11-year low. The bank’s findings were based on a survey of 20，000 people during the fourth quarter in 50 cities across China.The real estate market is another concern. The property market in China has been booming. Rising property prices， along with the government stimulus money and loose bank lending， have spurred new developments across the country.According to National Development and Reform Commission(NDRC)， the pickup November’s was largely driven by temporary and seasonal factors and that inflation will likely slow to 5% or below in December. By then， some of the recent administrative measures the government has taken to rein in prices of agricultural commodities， including price controls and releasing state reserves of some goods， will be showing some effects.Actually， the government has taken a series of measures to tame the accelerating inflation. Officials have signaled that moves will be taken to better control spending across the country. China announced on December 3 that it would tighten monetary policy in 2010， shifting it from “relatively loose to prudent.”That was a clear sign that Chinese officials were intensely concerned about inflation. The move to limit liquidity and bank lending， presumably through raising interest rates and other means， indicates that Chinese leaders are worried about inflation but feel confident enough in future growth that they can afford to cool the economy.On December 12， 2010， a statement released at the end of the annual Central Economic Work Conference said Chinese leaders had agreed to“put stabilizing the overall price level in a more prominent position” in their ranking of economic-policy priorities. The new language out of one of the key events in China’s economic calendar is likely to add to already-widespread expectations that the nation’s booming economy will face higher interest rates and tighter credit in coming months.On December 17， 2010， Li Keqiang， the vice premier， said at a conference of government officials that “more efforts should be provided to stabilize prices next year.” He added that over the next five years， growth rates should be defined “reasonably.”The central bank announced on December 25， 2010， that it was raising interest rates for the second time in about two months in what appears to be a long-term campaign to suppress inflation as many ordinary Chinese express discontent with rising consumer prices.The People’s Bank of China(PBOC) said it would raise the oneyear benchmark lending rate by 25 basis points to 5.81 percent， and the benchmark deposit rate by the same amount to 2.75 percent.The Chinese economy has been awash in liquidity due to government stimulus money and generous lending by state banks. Chinese officials are now concerned about an overheated economy and the inflationary pressures that come with that.The PBOC has also increased the proportion of deposits that banks must hold in reserve with the central bank six times in 2010 in a move aimed at reining in excess liquidity and tackling stubbornly high inflation.Officials have expressed their preference for such administrative measures because of fears that comparatively high rates could attract flows of “hot money” into the country， especially at a time of extraordinarily loose monetary conditions in still-struggling developed markets.On December 26， 2010， Chinese Premier Wen Jiabao voiced his confidence that the government can contain rising prices， seeking to reassure the public about inflation a day after the central bank raised interest rates for the second time in 10 weeks.Speaking to listeners during a visit to the state radio， Premier Wen acknowledged that recent price increases have “made life more difficult”for middle and lower income Chinese. But， pointing to measures the leadership has taken in recent months， he said: “As it looks now， we are completely able to control the overall level of prices.”Many economists say China could better fight inflation by allowing its currency to appreciate， which reduces the prices of imports in localcurrency terms. The yuan has gained close to 3% against the dollar since China un-pegged it from the U.S. currency in June 2010. But many analysts do not think that Chinese government is willing to accelerate currency appreciation because of fears it would undermine the competitiveness of China’s exports in dollar terms.