China's Growing Inflation Woes Could Spur Price Hikes In U.S.

China's home-grown inflation may be on the way here, along with its exports.

China's consumer prices shot up 6.5% in October vs. a year earlier, matching decade-high levels set in August, as food costs vaulted.

For the U.S. and other countries, China's inflation bears watching. That's because China has played a big role in easing global inflation by manufacturing low-cost goods.

China's booming demand for raw materials has driven up prices for energy, metals (OOTC:EMCKF) (NYSE:EMU) (OOTC:EYMTF) and other commodities. The upside has been that Chinese finished goods prices declined. But, that may be ending.

Surging food costs in China could drive wages higher as workers demand raises, some economists say. The big concern: Rising labor costs will push China into a broad inflationary spiral.

That would lead to higher prices for clothing, toys, steel and other products it exports. If China's exports get pricier, that would feed into U.S. inflation through a hike in the cost of imported goods.

Import Prices Climbing

October import costs from China rose 2.2%, the biggest yearly gain since surveys began in 2004. Import prices from China have climbed for a record five months in a row.

"The trend has been all upward and is now much higher than it has been," said Seamus Smyth, an economist at Goldman Sachs. (NYSE:GS) "A lot of it is China's internal labor costs are rising and they've allowed the yuan to move up a little against the dollar as well. All those factors make Chinese goods more expensive."

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