China's poor are struggling because of rising inflation and medium income earners are precluded from up-market consumption, according to a research body under the Chinese Academy of Social Sciences.

The conclusions came in an annual report conducted by the Sociology Research Institution which analyzes and predicts China's social developments, China.com reported yesterday.

The report found 10 percent of low income families in urban areas had per capita incomes 38.3 percent of the national average while 10 percent of the rural poor had per capita incomes just 33 percent of the national average.

Almost half the incomes of poor families went on food and medical costs took another 15 percent, the report said.

Lives of the impoverished, mostly farmers, the unemployed and laid-off workers, became even harder with last year's rising inflation.

China's consumer price index, the main gauge of inflation, climbed 6.9 percent in November, marking the fourth consecutive month when the index rose more than six percent. The price rises have already affected ordinary people, according to a previous report by Xinhua news agency.

The rocketing CPI was caused mainly by food prices which comprise about a third of the index.

"Controlling food prices and maintaining their stability are extremely important foundations for our social stability," said Li Peiyuan, director of the sociology institution.

Medium income earners were found to lack the purchasing power for up-market products priced above 10,000 yuan (US$1,369.86), the report said, without defining "medium" incomes.

Products for basic living are still the mainstream for the household expenditure for the medium income group although it pays close attention to price fluctuations for up-market goods such as houses and cars, the paper said.

According to the report, the per capita disposable income in urban areas rose 13 percent in 2007, surpassing the forecast gross domestic product growth of 11.4 percent last year.

The per capita disposable income in rural areas may have reached eight percent last year, the fastest growth in 11 years, the paper noted.

The paper also revealed that the disposable income of urban high income earners was almost 2.26 times the national average.

The rich pursue a high quality lifestyle, spending a great deal of their income on overseas travel, luxury hotels, golf and up-market imported products, the paper said.

The report also revealed that even with a growing skills shortage, university students were having a harder time finding job. Around one million of the nearly five million graduates last year didn't find a job.

(Shanghai Daily January 4, 2008)