The consumer price index (CPI) in China was up 8.7 percent year-on-year in February, the biggest jump in nearly 12 years since 1996, the National Bureau of Statistics (NBS) said on Tuesday.
Crude oil futures set another record high Tuesday on the weak US dollar. Light sweet crude for April delivery settled 85 cents, or 0.8 percent, to 108.75 US dollars a barrel on the New York Mercantile Exchange, after jumping to a record intraday high of 109.72 dollars a barrel overnight, which imposed greater strain to China's readjustment of refined oil price.
Triggered by the pressure from inflation, the rate of Renminbi is still rising against the US dollar hitting a new record high on Tuesday, constantly pressing on towards the 7.10 mark.
The above statistics imply that in the future, policy-making concerning macro-economic control in China will become more difficult. A senior economic administrator from the Economic Forecast Department of the State Information Center, Qi Jingmei, said that China consecutively raised the interest rates in order to harness the ever climbing consumer prices. On the other hand, with the fast appreciation of the Renminbi, practices on the part of the US of constantly lowering its interest rates may trigger a great influx of hot money into China, only making China's liquidity more excessive. This will make China's measures of constraining consumer prices less effective.
"The international oil price is predicted to continue rising in March, which would bring greater pressure for China's rising consumer price," noted Li Maoyu, an analyst on macro-economy with the Changjiang Security, adding "the February CPI statistics showed that besides food prices, the prices of industrial products, which were affected by the rising energy and raw materials prices around the world, had become a crucial factor pushing the rise of the CPI".
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(China.org.cn March 12, 2008)
