China's central bank admitted on Wednesday that the country is
facing heightened pressure stemming from price hike, and
acknowledged that inflation risks have become "worthy of
attention".
The People's Bank of China published its second-quarter monetary
report on Wednesday which revealed that current rising prices could
not be attributed en masse to accidental and temporary factors,
adding that inflation risks were on the rise.
It also warned that the price hikes seen on some food products
may spread to other consumer products, with four reasons being
identified as the main factor behind inflation.
Prices for grain and meat products, already soaring, were ruled
out from falling in the short term with uncertainties over the
autumn harvest far from being dispelled by the ongoing drought.
Meanwhile, the demand for grain is increasing from both the
public and the bio-fuel industry.
Meat prices will also keep rising in the long-term due to
increasing feeding costs and the short supply which the bovine
breeding cycle cannot keep up with. Furthermore, the price hikes on
meat could easily spread to other food products, the report pointed
out.
Prices of energy and resources are also feeling the squeeze as
the world petroleum price reaches new heights while the domestic
pricing reform of resources and the country's environmental
protection efforts could also contribute to elevated prices, 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 pronounced their worries about
inflation, the second highest record since 1999.
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.?
The rise was principally fueled by price hikes on foodstuffs,
mainly grain, meat and fowl and eggs.?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 News Agency August 9, 2007)
