China's central bank admitted on Wednesday that the country is facing heightened pressure stemming from price hike, and acknowledged that inflation risks have become "worthy of attention".
The People's Bank of China published its second-quarter monetary report on Wednesday which revealed that current rising prices could not be attributed en masse to accidental and temporary factors, adding that inflation risks were on the rise.
It also warned that the price hikes seen on some food products may spread to other consumer products, with four reasons being identified as the main factor behind inflation.
Prices for grain and meat products, already soaring, were ruled out from falling in the short term with uncertainties over the autumn harvest far from being dispelled by the ongoing drought.
Meanwhile, the demand for grain is increasing from both the public and the bio-fuel industry.
Meat prices will also keep rising in the long-term due to increasing feeding costs and the short supply which the bovine breeding cycle cannot keep up with. Furthermore, the price hikes on meat could easily spread to other food products, the report pointed out.
Prices of energy and resources are also feeling the squeeze as the world petroleum price reaches new heights while the domestic pricing reform of resources and the country's environmental protection efforts could also contribute to elevated prices, it said.
The report also said labor costs were rising which would eventually raise the prices of consumer products.
People's anticipation of inflation had been enhanced, and it would put further pressure on price hikes, according to the report.
A survey by the central bank in the second quarter showed that 40.2 percent of those interviewed pronounced their worries about inflation, the second highest record since 1999.
China's consumer price index (CPI) rose 3.2 percent in the first half of this year and the growth rate was 1.9 percentage points higher than the year-earlier level.
The rise was principally fueled by price hikes on foodstuffs, mainly grain, meat and fowl and eggs. Statistics show that foodstuff prices rose 7.6 percent, with grain price up 6.4 percent, egg price up 27.9 percent and prices for meat and fowl as well as related products up 20.7 percent in the first half.
(Xinhua News Agency August 9, 2007)
