A circular issued by the State Council stressed tighter monitoring of the market and price changes of grain products.

Figures from the National Bureau of Statistics (NBS) show that China's grain price increased by 4.7 percent in November, one percentage points higher than the rise in October.

The price increase is indicative of a recovery of farm produce prices after a decline in recent years and may help increase farmers' income, said the circular.

China's grain prices have been low for years, dampening farmers' enthusiasm to produce grain. But good harvests for three consecutive years and more attentive government policies have boosted the prices.

China's grain output is expected to reach at least 490 billion kilograms this year, compared to 484 billion kilograms in 2005.

Rising prices of grain products, although rebounding from a very low level, have alerted the government to possible panic in the market.

Measures should be taken to ensure the grain supply and maintain the price at a reasonable level so that the lives of low-income families are not affected, said the circular.

Priority should go to colleges, factories and mines as well as low-income urban residents, it said.

The circular called for strict implementation of subsidies for low-income urban residents and poor college students, and closer inspections of large-scale wholesale grain markets, supermarkets and markets of farm produces to prevent forestalling goods, price hikes and the sale of fake and substandard products.