China's inflation probably accelerated in February from an 11-year high in January as heavy snowstorms disrupted food and power supplies, according to the statistics agency.
China is still facing "very big pressures" to curb rising prices, National Bureau of Statistics Director Xie Fuzhan told reporters at the weekend in Beijing, where he is attending the annual National People's Congress session.
Consumer prices jumped 7.1 percent in January from a year earlier, the biggest increase since 1996. Premier Wen Jiabao said last Wednesday the government must do more to rein in lending and curb inflation in the world's fastest-growing major economy, a sign the central bank may raise interest rates for the seventh time in a year.
The worst snowstorms in half a century in areas such as Zhejiang, Guangxi and Hunan from mid-January closed factories, paralyzed transport and disrupted food and power supplies.
"The impact of the snowstorms will last for another three to six months, and inflation may peak in February while staying at high levels in following months," said Zhu Baoliang, chief economist at the State Information Center in Beijing.
Consumer prices in China probably rose 7.9 percent last month from a year earlier, according to the median forecast of 22 economists in a Bloomberg News survey. That would be the biggest gain since August 1996. The February inflation data is due to be released tomorrow.
"Chinese inflation will be ugly this week," Glenn Maguire, chief Asia economist at Societe Generale SA in Hong Kong, has said in a report.
The People's Bank of China has ordered commercial lenders to set aside more deposits as reserves on 11 occasions since the start of last year, pushing the ratio to a record 15 percent.
China is aiming to cap inflation at 4.8 percent in 2008, the same pace as last year.
"Inflation in the first quarter may reach eight percent as vegetable and pig supplies may remain short,'' Zhu said.
(Shanghai Daily March 10, 2008)
