Cost of food drives up consumer price index

[2008-12-23 17:04:13]

Cost of food drives up consumer price index
Double Click to Auto-Roll News Source ：中国食事传媒网 Publish Time：2008-5-13 Read： 653


CHINA'S consumer prices rose 8.5 percent in April, mainly driven by uncurbed food costs, the National Bureau of Statistics said yesterday. This compared to 8.3 percent in March and 8.7 percent in February. Following the release of consumer prices, the central bank announced a raising of the reserve requirement for another 0.5 percentage point to 16.5 percent on yuan deposits, effective on May 20.   The consumer price index, the main gauge of inflation, rose 8.1 percent in cities and 9.3 percent in rural areas last month. "The CPI figure remains high because of a low base last year and the soaring prices of primary food on the international market to push up domestic food costs," said a statement on the bureau's Website.   Food prices, which make up around one third of the CPI basket, soared 22.1 percent in April. The cost of pork rocketed 68.3 percent from a year earlier while edible oil jumped 46.6 percent and vegetables grew 13.6 percent.   The non-food sector saw a growth of 1.8 percent last month, compared to 1.6 percent in February. The March figure was not available.   "The growth is in line with our estimate ranging between 8.3 to 8.5 percent for April. It is still a stable growth and the inflationary pressure will gradually ease in the coming months," said Li Maoyu, an analyst with Changjiang Securities.   Tao Dong, a Credit Suisse economist, shared that view but cautioned about price increases in the non-food sector.   "We believe the CPI is likely to moderate over the next few months, as food inflation can be curbed by a higher base and improved pork supplies. However, we are cautious about non-food inflation fueled by wage hikes in the medium term," Tao said.   The producer price index, the factory-gate inflation gauge, jumped 8.1 percent year on year in April to reach a record high in more than three years, boosted by accelerating energy and raw material prices.   "We expect Chinese producers to raise selling prices to help cover the rising input costs amidst continued hikes in raw material prices.   Nevertheless, we do expect further pick up in non-food inflation," said Wang Qing, a Morgan Stanley economist.   "We maintain our forecast for easing headline inflation ahead. Though it rebounded in April, the latest reading is still below the 8.7 percent seen in February. We reaffirm our call that the index has already peaked."   An interest rate increase is not likely in the short term, industry sources said and they pointed out that price interventions were moves more likely to be taken by the government to tame inflation.   Since last year, China has raised interest rates six times to cool the economy and fight inflation.   The index gained 8.2 percent year on year through April. Retail sales figures are to be unveiled today.

 
 
 
Source: 中国食事传媒
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