A Chinese national research center said on Wednesday that the
consumer price index (CPI) is still within government control
although it will "keep rising at a moderate rate for a relatively
long time".
Recent price hikes signaled moderate inflation only, in
which the prices rise steadily at a relatively low rate. Inflation
was not high nor out of control, said the State Information Center
(SIC).
SIC research into the CPI changes in the past two decades
suggested that a growth rate of five percent was the threshold for
moderate inflation in China. It is well above the accumulative 3.5
percent CPI growth in the first half.
Although the threshold was exceeded by the 5.6-percent growth in
July, inflationary pressure was not severe compared to similar
accelerated price hikes in 2004. At that time the CPI rose by at
least five percent for four straight months from June to
September.
If accelerated CPI growth occurred, the government could still
effectively rein in prices through policies such as the suspension
of government-controlled price rises, said the SIC.
The SIC attributed the pressure for further price hikes to
future growth in food and housing prices.
Food price increases would likely last some time because of
tight domestic supply market and soaring international food prices,
which rose 20 percent in the first four months, SIC quoted from a
World Bank report in May.
Housing prices, accounting for 13.2 percent of the CPI,
increased by four to five percent since 2005 because of the soaring
demand.
Large salary increases for government workers last year,
together with the booming stock and real estate markets, boosted
domestic demand, which would drive up prices overall, the SIC
said.
The SIC forecast that CPI growth would?stand at around four
percent in 2007, higher than the three-percent goal set at the
beginning of the year.
(Xinhua News Agency August 16, 2007)
