China's central bank has warned that although last year's
consumer price index was a moderate 1.5 percent, there is increased
pressure on price hikes in the coming year.
A recent report by the People's Bank of China said that the risk
for an upward price trend is building up, despite that the output
capacity of some industries has been increasing rapidly and prices
of staple goods in the international market have been falling.
The CPI for January this year was 2.2 percent, which was 0.6
percentage points lower than that for the previous month. The
country's CPI was on an upward trend in 2006 from 1.9 percent in
January to 2.8 percent in December.
The report said that there is considerable pressure on the
rebound of investment and credit demands, and enterprises will see
higher cost in labor, raw materials, energy, land, water and other
resources products, largely due to the state's tightened control on
environment protection, social security and work safety.
A sample questionnaire done by the central bank on urban
depositors in the fourth quarter of 2006 showed that residents are
not optimistic about price anticipations, and the expected price
index rose to the highest since 1999 when the questionnaire was
launched for the first time.
To alleviate inflationary pressures, the central bank announced
last week to raise the required deposit reserve ratio for financial
institutions by 0.5 percentage points to 10 percent.
(Xinhua News Agency February 18, 2007)