3pc rise a hint economy is overheating Prices on the mainland rose 3 per cent in November, the biggest year-on-year rise since 1997 - raising fears the economy is starting to overheat. The rise in the consumer price index comes after other recent economic data that suggests business is moving at a breakneck pace. Vice-Premier Zeng Peiyan on Thursday said the economy was likely to grow 12.5 per cent next year - much higher than the official 8 per cent target. Meanwhile, industrial production jumped 18 per cent in November and money supply rose 22 per cent in October. Economists say the numbers add up to a warning to China's policymakers that they had better pay close attention to the country's economic growth. 'In the recently concluded economic working conference, the basic tone was, 'we don't see significant overheating',' Credit Suisse First Boston regional economist Dong Tao said. 'With these numbers, policymakers will have second thoughts.' Mr Tao and other economists say the picture presented by the economic data is still far from clear. Within the consumer price index, food prices rose 8.1 per cent, while car prices dropped 4.6 per cent and home appliances were down 2.3 per cent. Subtracting food, the overall price index rose just 0.3 per cent. Reflecting this uncertainty, government officials are torn between reining in spending and money supply to control economic growth, or spending more and loosening loan restrictions to help jump-start small businesses and keep unemployment in check. Economists generally agree that mild inflation would not cause major difficulties in the short term. Deflation, which the country has experienced for several years, can be as harmful as inflation because businesses have to improve efficiency to keep up. Most economists are forecasting inflation of 3 to 4 per cent next year. On the political front, food is a highly sensitive issue, particularly as people struggle with job insecurity. Food accounts for 40 per cent of rural incomes and about 30 per cent for city dwellers. David Zweig, a professor at Hong Kong University of Science and Technology, said: 'If the enterprise that laid them off isn't giving them more money, an 8 per cent rise in food prices would be significant.'