Despite consumer prices hitting a 10-year high, economists have ruled out the possibility of further rapid price rises and forecast a slowdown in two or three months.

 

They based their judgment on the fact that the spurt in the consumer price index (CPI), which gained 5.6 percent in July year-on-year, was mainly caused by short supply of food products, especially pork.

 

But some warned that the growing buying power caused by rising incomes and anticipated price increases of resources and energy are major worries.

 

Lin Yueqin, a researcher with the Chinese Academy of Social Sciences, said the government has already taken measures to encourage farmers to raise more pigs and guarantee meat supply. "I believe meat prices will fall in two or three months as supply returns to normal."

 

The outbreak of blue ear pig disease forced farmers to slaughter sows and piglets this year, affecting pork supply. The wholesale price of the staple meat as a result soared 74.6 percent year-on-year in June.

 

Food prices jumped 15.4 percent while non-food items rose only 0.9 percent in July. Meat and meat-related foodstuff rose 45.2 percent compared with the same period last year.

 

 

"China has the capacity to guarantee the supply of meat products," said Lin.

 

CPI has risen year-on-year 5.6 percent in July, 4.4 percent in June and 3.2 percent in the first six months.

 

A research team of the Development Research Center of the State Council holds that prices of manufactures are still stable. During the first six months, the core CPI, an internationally accepted inflation index that excludes food and energy, rose a mere 0.9 percent, meaning inflation is still at a low level.

 

(China Daily August 14, 2007)