China's consumer prices rose 3 per cent in November, compared
with last year at the same time, because of surging food prices,
the National Bureau of Statistics said on Friday.
November's jump in the consumer price index (CPI) -- the key
inflation gauge used by policymakers -- was the highest monthly
rate seen since April 1997, when CPI rose 3.2 per cent
year-on-year.
Urban consumer prices increased a year-on-year 2.4 per cent,
while in rural areas they rose 3.9 per cent, the bureau said.
For the first 11 months, the CPI rose a year-on-year 1 per
cent.
Qi Jingmei, a senior economist with the State Information Centre
specializing in consumer prices, said the surprisingly higher CPI
in November was mainly because of soaring food prices.
In November, food prices rose a year-on-year 8.1 per cent, the
statistics bureau said.
Grain prices surged 10.8 per cent last month while fresh
vegetable prices jumped 19.4 per cent and edible oil prices soared
27.2 per cent.
Surging food prices also indirectly led to higher costs for
other commodities, Qi said.
The cost of services rose 2.2 per cent in November from a year
ago, the statistics bureau said.
Among service items, prices for medical care services rose 8.1
per cent, it said.
"The food price increase will continue to have a great impact on
the CPI in the coming several months," Qi said.
Zhang Liqun, a senior researcher with the State Council's
Development Research Centre, said the increase in food prices is
mainly due to the grain price hike caused by a reduction in
production.
"Adjustments to the grain production structure and natural
disasters, such as flood and drought, have led to the reduction in
production," Zhang said.
Summer grain production dropped 2.4 million tons this year
compared with last year to 96.22 million tons, figures show.
But analysts say the price for grain and food is not likely to
increase any time soon, and if it does, it will not be by much.
The price rise also likely would not trigger a new round of
inflation, Zhang predicted.
The increased supply capacity would restrict the consumer price
from rising by much, he explained.
The higher inflation rate of 1993-95 was mainly due to the lack
of basic products resulting from weak agricultural and industrial
production, he said.
At that time, production of the country's food supply, raw
materials and electricity fell short of demand and prices rose
quickly.
But since the mid-1990's, the country's economy has managed to
come out of the supply bottleneck.
An investigation by the Ministry of Commerce on the demand and
supply of the country's 600 major products suggests that today no
products fall short of supply.
"More importantly, the foundation for supply growth has
improved," Zhang said.
The country is capable of providing sufficient funding, labour
and technology to increase the supply capacity, he added.
(China Daily December 13, 2003)