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China's consumer prices rose by 5.3 percent year-on-year in July, the National Bureau of Statistics said Thursday.
The consumer price index (CPI), policy-makers' key inflation gauge, was greater than the June figure of 5.0 percent. But CPI in July fell 0.2 percent from June.
Grain prices rose 31.8 percent in July from a year earlier, while vegetable prices jumped 13.4 percent, the bureau said.
But vehicle prices dropped 3.5 percent, and the prices for communications products including mobile telephones fell 15.2 percent.
The bureau said the CPI rose year-on-year by 4.9 percent in urban areas but by 5.9 percent in rural areas.
Economist Zhu Jianfang at China Securities said CPI had reached its peak.
"The consumer prices should begin to drop from August," he said.
The higher CPI was partly due to a supply bottleneck in some sectors, according to an earlier report from the statistics bureau.
Fast fixed asset investment growth since the second half of last year resulted in price rises for products such as steel, non-ferrous metals, coal, electricity and oil, the report said.
A fall in the grain production, which declined 5.8 percent last year, also resulted in a rapid price rise since last October.
The report said the outbreak of bird flu in the first quarter led to price rises for meat, chicken and eggs.
Price fluctuations in the international market and a lower price base last year due to the SARS (severe acute respiratory syndrome) outbreak also contributed to the higher CPI, it said.
Qi Jingmei, an economist at the State Information Center, said the price situation would ease in the next few months.
"The impact of food prices on CPI will reduce," she said.
The central government's macroeconomic control measures would also have an impact on higher CPI.
China took a raft of measures since the second half of last year to try to cool down the economy. The measures include raising bank reserve requirements three times and curbing unwanted fixed asset investment projects.
The macroeconomic control measures have achieved initial results, said Zhang Xueying, another economist from the information center.
Price rises in some sectors, such as steel and non-ferrous metals, which saw an overheating investment, have been controlled to some extent.
The growth in industrial output and money supply also slowed down.
The country's industrial output rose year-on-year by 15.5 percent in July. The growth rate was 0.7 percentage points lower than the previous month.
Broad money supply -- M2 -- rose a year-on-year 15.3 percent in July, according to the central . The growth rate was 5.4 percentage points lower than a year earlier, and 0.9 percentage points down from the previous month.
"The government should not take further measures including a rate hike to cool the economy," Zhang said.
He added that the central government wants to bring economic growth down from the current levels where many resources such as oil have been constrained, but the growth needs to be above 7 percent to generate enough jobs.
Statistics bureau spokesman Zheng Jingping said the overall performance of the country's economy was good.
The national economy remained stable and enjoyed fast growth, while economic efficiency improved continuously, he said.
Uncertainties and unhealthy factors existing in economic performance have also been placed under initial control, Zheng said.
(China Daily August 13, 2004)
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