Chinese central bank warns of inflation risks in latest monetary report
9/8/2007 17:01
China's central bank admitted yesterday that the country is coming under
increasing pressure from price hikes, and acknowledged inflation risks are
"worthy of attention". The People's Bank of China said in its second-quarter
monetary report published on Wednesday that the current rising prices were not
solely caused by accidental and temporary factors, adding that inflation risks
were on the rise. It warned that the price hikes of food products could
spread to other consumer products. The report identified four reasons behind
the increasing risk of inflation. It said prices for grain and meat products
would not fall in the short term and uncertainties over the autumn harvest were
aggravated by the ongoing drought. Meanwhile, the demand for grain is
increasing from both the public and the bio-fuel industry. The meat prices
would probably continue to rise in the long term owing to the rising feeding
costs and the short supply, which would not be replenished in the short term due
to the breeding cycle of pigs, and the price hikes of meat could easily spread
to other food products, the report said. Prices of energy and resources are
under pressure as the world petroleum price has climbed to an even higher level
and the domestic pricing reform of resources and the country's environmental
protection efforts would also push the prices higher, it said. The report
also said labor costs were rising which would eventually raise the prices of
consumer products. People's anticipation of inflation had been enhanced, and
it would put further pressure on price hikes, according to the report. A
survey by the central bank in the second quarter showed that 40.2 percent of
those interviewed, the second highest record since 1999, said they were worried
about inflation. China's consumer price index (CPI) rose 3.2 percent in the
first half of this year, and the growth rate was 1.9 percentage points higher
than the year-earlier level. Price hike for foodstuffs, mainly grain, meat
and fowl and eggs, contributed significantly to the rise. Statistics show that
foodstuff prices rose 7.6 percent, with grain price up 6.4 percent, egg price up
27.9 percent and prices for meat and fowl as well as related products up 20.7
percent in the first half.
Xinhua
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