Tightening excess money supply and increasing competitive investment could help lower commodity prices.

The recent rises in commodity prices and looming inflation have become of increasing concern, not just to the Chinese government, but also to many ordinary people.

Since it turned positive at the end of 2009, the country's consumer price index (CPI) has kept rising. Data from the National Bureau of Statistics (NBS) showed that the CPI rose to a 25-month high of 4.4 percent in October, up 0.7 percent on September.

The price hikes of foods and household items have proven to be the main factor pushing up prices. According to the NBS data, food prices in October grew 10.1 percent year-on-year and contributed 74 percent to the month's CPI growth, and the price of consumer commodities increased 4.9 percent from a year earlier, which contributed 16.6 percent to the increased CPI that month. At the same time, the producer price index (PPI) in October increased 5 percent year-on-year, a 0.7 percent rise from September.

Since the start of 2010, prices of some domestic basic foods - from garlic and ginger, to soybeans, apples and sugar - have experienced big rises, sparking a chain reaction in the price of other commodities and aggravating public concerns over inflation. The latest round of inflation pressure has mainly stemmed from the combination of a series of internal and external factors, including monetary and economic ones.

Monetary over-supply has been blamed as the main cause of the looming inflation. Since the start of the global financial crisis, the Chinese government has introduced a series of stimulus packages and offered a comparatively loose monetary environment to ensure economic recovery.

However, despite helping revive the national economy the ever-expanding lending volumes have also caused fluidity excess. By the end of September, the country's M2 volume had reached 69.64 trillion yuan ($10.44 trillion). That means that the country's central bank has over-issued a total of 42 trillion yuan, given that China's gross domestic product (GDP) in the first three quarters was only 26.87 trillion yuan.

Monetary over-supply has undoubtedly fuelled price rises, which, together with speculation by investors, has continuously pushed up the price of properties and consumer commodities.

In addition, trade surplus and the inflow of hot money have also added to China's over fluidity.