It is no surprise that the Chinese premier Wen Jiabao highlighted inflation as a potential threat to social stability in a recent online question and answer session.
With China's leaders already jittery over the turmoil that has swept through much of the Middle East, the last thing they want is public anguish over repeated price rises.
The inflation issue really is that significant in the world's most populous nation. It was regarded as playing a part in the public discontent that led to the 1989 Tiananmen Square protests that were violently suppressed. In January, the country's Consumer Price Index reached 4.9 per cent and prices for some key consumer goods, notably food, are increasing at double this rate.
Some state media, such as the official Xinhua news agency, are laying the blame at the West's door, saying China is "a victim of global inflation" that results from "America's ultra-loose monetary policy".
But most believe the root cause lies within China's own "huge monetary surge of the last couple of years", says Tom Miller, an analyst with the Dragonomics consultancy in Beijing.
"Inflation is a result of the lax monetary policy," Mr Miller says. "We're [now] seeing considerable tightening."
Since last October there have been three interest rate rises and experts are predicting as many again before the end of the year.
Bank reserve ratios are also being lifted, now up to 19.5 per cent for the major lenders, and may go as high as 25 per cent, Mr Miller predicts, as authorities try to restrict lending that heavily exceeded targets last year and was considered to have contributed to the rapidly rising prices.
Chinese banks made loans totalling 7.95 trillion yuan (Dh4.44tn) last year, significantly greater than the target of 7.5tn yuan.
But that is just the official figure, and while this year's target aims for a cut of about 10 per cent from last year's lending, the crucial point is what measures the authorities take to clamp down on loans off the balance sheet, Mr Miller says.
"They are trying hard and the signs are they are taking it seriously," he says.
Yet pressures remain that will keep inflation high, according to Dr Bala Ramasamy, a professor of economics at the China Europe International Business School in Shanghai.
Among those pressures, Dr Ramasamy says, is the rapid wage inflation China is experiencing.
There was widespread discontent last summer as countless thousands of workers in China's manufacturing belt went out on strike, with a tightening labour market given them more room to manoeuvre when it came to wage negotiations.
The price of oil, pushed higher by the turmoil in parts of the Middle East, is providing further upward pressure on prices, Dr Ramasamy says.
"It's a spiral. I don't think it's going to go away this year," he says. "We should be expecting 5 to 7 per cent inflation pretty much the whole year through."
Others experts, such as Ren Xianfang, an analyst at IHS Global Insight in Beijing, believe inflation will peak in the first half of this year before tailing off later in 2011 as GDP growth, which was 10.3 per cent last year and is also a target for reduction, tails off.
"I wouldn't be surprised if inflation peaks in a couple of months," says Ms Ren, who has also warned of risks that action to curb inflation could be too severe, causing growth to drop off too heavily.
Whatever the prospects for this year, many believe that over the coming decade, inflation rates are likely to remain higher than China has been used to over the past 10 years.
The higher labour costs are key, Mr Miller says, with demographic realities meaning fewer young people will be coming on to the job market.
"In 2015 the whole labour force begins to shrink. Inflation will be stronger over the next decade," he says, suggesting price rises would average about 4 per cent.
"Over the short term it will go [down] to 3 or 4 per cent, but not to what it was. That's not something the government should be too worried about."
