Spirits are running high ahead of this week’s Chinese New Year holiday as prices of a popular grain liquor soar.

Moutai, the fiery official liquor for state banquets since the Communist revolution, has been variously described by foreign dignitaries as “liquid razor blades” and “smelling like a barnyard and tasting like turpentine”. It was famously inflicted on Richard Nixon during his historic visit to China in 1972, and on Margaret Thatcher in 1984 after she agreed to return Hong Kong to China.

But for those seeking the perfect gift to curry favour with Chinese officials, moutai is indispensable at this time of year. With annual food inflation hitting 7.2 per cent last year and with stocks running dry, the state-controlled company that makes China’s most famous moutai brand raised wholesale prices 20 per cent this month – its first increase in a year.