This year's consumer inflation is likely to exceed the central
bank's target of 3 percent, a top official said Wednesday.
"Given the relatively high inflation in the first seven months
of the year, even if we step up control measures now, the consumer
price rise will still probably be above 3 percent for the whole
year," Su Ning, vice-governor of the People's Bank of China (PBOC),
told a news conference in Beijing Wednesday.
"The central bank is paying close attention to changes in prices
and will take further macroeconomic control measures to keep prices
stable," Su said.
Spurred by surging food prices, the consumer price index, a key
gauge of inflation, hit a 10-year high of 5.6 percent in July, up
from 4.4 percent in June. The average inflation in the first seven
months rose 3.5 percent year on year.
Food prices, which make up about a third of the inflation
basket, rose 15.4 percent year on year last month. Prices in the
first seven months rose 8.6 percent from the same period last
year.
In a report to the Standing Committee of the National People's Congress, Ma Kai, minister of
the National Development and Reform Commission (NDRC), said the
government will take a slew of measures such as encouraging pig
raising and increasing grain and vegetable supplies, to curb
inflation.
"The government will also strengthen monitoring of prices and
step up efforts to crack down on price cartels and illegal price
rises," the minister said.
In an effort to curb inflation, the central bank last week
raised interest rates for the fourth time this year. The benchmark
one-year deposit rate is now 3.6 percent while the one-year lending
rate is 7.02 percent.
"I expect the central bank to raise interest rates for the fifth
time at the end of October," Li Zhikun, senior analyst at China
Investment Securities Co Ltd, told China Daily.
Li estimated inflation in August to be above 6 percent due to
the continuing rise of food prices, and forecast that inflation for
the full year will likely to be around 4.2 percent.
Jun Ma, China economist at Deutsche Bank in Hong Kong, also
estimated August inflation at round 6 percent; and believes the
likely timing of the next rate hike will be in the second half of
September.
(China Daily August 30, 2007)
