Abstract: In recent years, our country has experienced greater inflation for three times. By analyzing fluctuation of the CPI, the fact of food price leading price raising can be examined. One of the reasons is price elasticity of food demand is small. The second is the increasing speed of farming labour productivity is far behind other industries. The third is the total output increasing rate of farming products is lower than the other industries. And the last is the price of framing products returns to their real value. In order to keep the sustainable increase of food price, our government should do its best to support the development of farming, to encourage and to provide financial support for farming technological innovation, and at the same time to reduce administrative interference to market and to support self development of the market.

Key words: inflation, price elasticity, labour productivity, farming total output