The National Bureau
of Statistics (NBS) said Tuesday that grain prices continued
their upward trend in February, with wheat, corn and soybeans
rising by 19.9, 21.5 and 31.4 percent, respectively, on a
year-on-year basis, all faster than the pace recorded in the
previous month.
Cotton prices jumped 41.7 percent from a year earlier.
The persistent price hikes in cotton resulted from a widening
shortage of supply, the bureau said, as factors like unfavorable
weather conditions reduced output while demand continued to surge
on the rosy prospects for textile exports.
Prices in vegetables and fruits dropped overall, with 2004
supplies growing gradually as the weather gets warmer and
consumption abating after the
Lunar New Year.
Also yesterday, the NBS said that industrial output grew 23.2
percent in February. The rise in the first two months was reported
at 16.6 percent, which compares to an average of 17.0 percent last
year.
"The situation is similar to what we expected, and is just
normal," said Zhang Liqun, a senior analyst with the Development
Research Center (DRC), a think-tank under the State Council.
Grain prices are likely to maintain the upward trend that
started last year and stabilize when summer grain hits the market,
he said. Grain supply is expected to rise owing to greater planting
areas.
Accelerating prices in the second half of last year and so far
this year have prompted worries about inflation and discussions of
an interest rate hike, although central bankers have said they need
to keep watching price trends and wait to see the delayed effects
of last year's policy moves.
Wang Yuanhong, a senior analyst with the State Information
Center, said the prospect of an interest rate hike this year
largely depends on whether the consumer price index (CPI), which
came in at 3.2 percent in January, maintains its momentum in the
coming months.
It could also depend on whether the effects of last year's
monetary policy turn out to be strong enough to curb rapid credit
growth.
Despite the continued price acceleration in the first two
months, Zhang said he expected CPI to stay at around 3 percent this
year as growing aggregate supply will cool down prices.
"Supply is growing fairly well," he said, citing the rapid
increases in steel output and power generation as well as excess
supply of some industrial products.
The prices of grain, which account for about one-third of
China's CPI, are also expected to fall later this year as farmers
sow more seed in pursuit of greater profit.
"So the rise in grain prices will not last for too long," Zhang
said.
The bird flu outbreak still had some effect on poultry prices in
February, the bureau said, but the impact is subsiding owing to
government measures to help increase supplies.
Prices of live chickens last month fell by 11.1 percent from
January, while those for eggs dropped by 5.8 percent, the bureau
said.
(China Daily March 17, 2004)