China to subsidize food after price spike

BEIJING (AP) — China's government announced food subsidies for poor families today as it tries to cool a double-digit surge in prices that communist leaders worry might stir unrest.

The Cabinet promised to ease shortages of vegetables and grain that helped push up food prices by more than 10 percent in October. It promised more supplies of diesel to end fuel shortages that have disrupted trucking and industry.

The Cabinet said it was not ordering direct price controls but said they could be imposed if necessary. The statement gave no details of the subsidies or how the government would try to increase food supplies.

Inflation is politically volatile in China, where poor families spend up to half their incomes on food. Rising incomes have helped to offset price hikes, but inflation erodes gains that help support the ruling Communist Party's claim to power.