China's consumer prices rose at a faster pace in April, due
largely to higher prices for utilities, figures from the National
Bureau of Statistics show.
The consumer price index (CPI), a key inflation measurement,
rose 1.2 percent in April compared with the same month a year ago,
accelerating from the 0.8 percent increase in March.
For the first four months of the year, the CPI rose 1.2 percent
year on year, Friday's figures show.
Qi Jingmei, a senior economist with the State Information
Centre, said the acceleration (in CPI growth) is not a surprise and
should have come earlier.
"A low CPI will hurt the country's economy, which rose 10.2
percent during the first quarter of this year," she said.
Qi said April's higher CPI was mainly because of price
adjustments in the cost of water in some provinces.
Prices for utilities, including water, rose 6.8 percent year on
year in April, figures from the statistics bureau show.
"The price of utilities will continue to have a big impact on
the CPI in the coming months, as some other provinces also plan to
raise prices for things such as water, gas and electricity," she
said.
Relatively lower prices for utilities have long been criticized
by economists and government officials because they do not
encourage a resource-efficient society.
The National Development and Reform Commission has decided to
let local governments raise prices for utilities.
Because of this, the country's CPI for this year will be higher
than that of last year, when the figure was 1.8 percent, said
Zhuang Jian, a senior economist with the Asian Development Bank's
Resident Mission in China.
"Utilities will play an important role in this year's CPI
because prices for food and industrial products, two other major
factors, will be relatively stable, " he said.
Since a majority of the country's industrial products still
suffer from oversupply due to strong investment over the past
several years, companies are unlikely to pass their higher costs on
to consumers, he said.
Producers, especially those that make mobile phones and cars,
dare not raise their prices because of fierce market
competition.
"They prefer to lose money rather than market share," he
said.
"The CPI is expected to rise 1.5 percent in the second quarter
and 1.7 percent in the third," Qi's centre predicted.
According to the statistics bureau, the cost of food, which
accounts for about one third of the CPI, rose 1.8 percent year on
year in April after gaining 0.8 percent in March.
Grain prices rose 1.2 percent, the fourth straight monthly
increase and the biggest gain since March 2005.
Non-food prices rose 0.9 percent compared with 0.8 percent in
March.
The price of fuel and vehicle spare parts rose 11.2 percent last
month after a 10.6 percent gain in March.
(China Daily May 13, 2006)