| Inflation still high at 8.5% in April |
|
| 2008-05-13 05:41 |
| From:china daily Article type:Reproduced |
By Wang Xu
Updated: 2008-05-13 07:49
China's consumer inflation surged to 8.5 percent year-on-year in April, highlighting the difficulty of realizing the government's annual target of 4.8 percent.
The April reading was up from March's 8.3 percent but only slightly lower than February's 12-year record high of 8.7 percent. The inflation rate for the first four months of 2008 stood at 8.2 percent.
It will be difficult for China to keep inflation at less than 4.8 percent this year, the target Premier Wen Jiabao announced in March, National Bureau of Statistics (NBS) Chief Economist Yao Jingyuan said at a forum on Sunday.
Food prices last month increased 22.1 percent year-on-year, NBS reported yesterday. Meanwhile, non-food prices rose 1.8 percent from a year ago. The bureau attributed the inflation rebound to last April's relatively small base, while recent commodity price hikes also worsened the situation.
"We need to closely monitor the trends of future price movements, and play a prominent role in the fight against inflation and the prevention of further price rises," the NBS said in its report.
The recent surges in global grain prices could further increase the risk that domestic grain prices may lead to another wave of food price inflation in the months to come, Lehman Brothers economist Sun Mingchun said, adding the CPI inflation could reach 5.5 percent year-on-year in 2008
Goldman Sachs' economists Song Yu and Hong Liang said the underlying inflationary pressure hasn't diminished, given the latest figures. They also said it is vital for the government to maintain its tightening monetary policy to anchor inflationary expectations.
The government has used interest rate hikes and ordered local banks to put aside more cash to soak up excess liquidity, one of the factors stoking inflation. Also, yesterday, the central bank decided to raise the deposits reserve requirement ratio to 16.5 percent, the highest in 23 years.
Yesterday's figures also revealed consumer prices gained 0.1 percent in April from a month ago, while food prices dropped 0.1 percent during the period. This demonstrated a deviation from the previous pattern in which food accounted for the lion's share of inflation, raising concerns that non-food sectors will become new drivers of price hikes.
China's producer price index (PPI), which monitors factory-gate prices, last month climbed to a four-year high of 8.1 percent. The producer price index is considered a leading indicator for consumer inflation. Analysts say it usually takes about six months for producers to pass their cost pressures on to consumers.
"The non-food sectors have recently been exerting increasing inflationary pressure," Bank of Communication economist Lian Ping said. "If that continues, the possibility of bringing inflation to within 4.8 percent this year is slim."
|
