The August consumer price index (CPI), to be released by the
National Bureau of Statistics (NBS) tomorrow, is estimated by many
institutions to have grown more than 6 percent to the highest level
in a decade, the Beijing Morning Post reported today.
HSBC and China Construction Bank both predicted last week that
the CPI for August will grow more than six percent. CITIC
Securities said the growth will hit as high as 6.3 percent.
Liang Hong, chief China economist with investment bank Goldman
Sachs, said the August CPI will increase by 6.2 percent while the
CPI growth for the whole year will reach 4.5 percent, up from the
previous prediction of 4 percent.
Ma Jun, chief economist for Deutsche Bank Greater China, also
said China's CPI for August will grow 6 percent year on year.
Soaring prices for foods such as pork is a major reason for the
CPI growth. Pork prices have declined since the end of July, but
prices for egg and vegetable rose sharply in August.
Bi Jingquan, vice-minister of the National Development and
Reform Commission, said last Tuesday that the imbalance in the pork
market will recover by mid-2008.
High inflation pressures also triggered more tightening
policies.
The People's Bank of China, the nation's central bank, on
September 6 raised the amount commercial banks must hold in reserve
by 0.5 percentage points, for the seventh time this year.
In addition, the central bank issued 151 billion yuan (US$20
billion) of bills with a maturity of three years last Friday,
further reducing the money available to banks for lending.
"The two policies aim at curbing liquidity," said Chen Jijun, an
analyst with CITIC Securities. "The central bank is predicted to
raise the interest rate again this year," Chen added.
The central bank has hiked interest rates four times this year
to curb excessive liquidity.
The producer product index (PPI) for for manufactured goods grew
2.6 percent in August compared with the same month last year, up
from July's 2.4 percent, the NBS announced today.
(China Daily September 10 2007)
