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China Attempts to Fight Inflation with Price Freeze

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Late last week, the Chinese government, through six of its ministries, announced a "price freeze" on all prices that remain under its control, which mainly appear to be oil, electricity, water and a variety of other fees for government services. This move follows a monthly inflation rate of 6.5 percent in August, which represented an 11-year high. The government has also raised domestic interest rates five times in 2007. So far, none of these measures have had much of an impact, and one reason is that the center of inflation is in foods, where price increases have been driven from a supply shortage.