China's commodity prices rose 1.7 per cent in March compared with the same month last year, the People's Bank of China said yesterday.
Oil prices doubled compared with the figure for March 2002, while the price of non-ferrous metals rose 7 per cent, the central bank said in a statement.
Food prices grew a year-on-year 1.6 per cent, while the price for cooking oil edged up 5.5 per cent, the bank said.
The positive changes in commodity prices suggest that China's economy has turned for the better and deflationary pressure has continued to ease, said Zhang Xueying, a senior economist with the State Information Centre.
Zhang explained that the price measurement - although different from the consumer price index (CPI), a key inflation gauge compiled by the National Bureau of Statistics - moves in the same direction as the CPI and reflects the same economic issues.
"The price rise were partly due to the surging oil prices resulting from the US-led war on Iraq," Zhang said.
Niu Li, another senior economist with the centre, said the central bank's move to boost money supply in recent months has also contributed to the price rises.
The central bank has said it would boost both broad money supply (M2) and narrower money supply (M1) by 16 per cent this year. M2 was up 18.5 per cent at the end of March from a year earlier and M1 was up 20.1 per cent.
Wang Zhao, a researcher at the Development Research Centre under the State Council, said the price rise suggested that booming domestic and overseas demand has help balance overall supply and demand.
The government's efforts to cut over-production and increase the capacity for new products also contributed to the improvement, he said.
"The price rises were good news for China's economic development, because the price decline was threatening corporate earnings," Wang said.
Zhang said commodity prices will continue to rise in the coming months.
"The national economy will continue to grow at a higher rate this year, which will play an active role in the price rises," he said.
The strong growth of industrial production will also continue, because of the country's fast-growing economy, the improvement of industrial companies' economic efficiency and excellent export prospects.
"This will require a lot of energy and raw materials, which are beneficial to the price rises," he said.
But the three experts agreed that commodity prices could not grow by a large margin, because of a number of in-depth reasons.
"No Chinese-made products fall short of supply," Niu said.
(China Daily April 15, 2003)
