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BIZCHINA / News
Central bank warns of inflation risks in latest monetary report
(Xinhua)
Updated: 2007-08-09 08:48
China's central bank admitted on Wednesday that the country is coming
under increasing pressure from price hikes, and acknowledged inflation
risks are "worthy of attention".
The People's Bank of China said in its second-quarter monetary report
published on Wednesday that the current rising prices were not solely
caused by accidental and temporary factors, adding that inflation risks
were on the rise.
It warned that the price hikes of food products could spread to other
consumer products.
The report identified four reasons behind the increasing risk of
inflation.
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It said prices for grain and meat products would not fall in the short
term and uncertainties over the autumn harvest were aggravated by the
ongoing drought.
Meanwhile, the demand for grain is increasing from both the public and
the bio-fuel industry.
The meat prices would probably continue to rise in the long term owing to
the rising feeding costs and the short supply, which would not be
replenished in the short term due to the breeding cycle of pigs, and the
price hikes of meat could easily spread to other food products, the
report said.
Prices of energy and resources are under pressure as the world petroleum
price has climbed to an even higher level and the domestic pricing reform
of resources and the country's environmental protection efforts would
also push the prices higher, it said.
The report also said labor costs were rising which would eventually raise
the prices of consumer products.
People's anticipation of inflation had been enhanced, and it would put
further pressure on price hikes, according to the report.
A survey by the central bank in the second quarter showed that 40.2
percent of those interviewed, the second highest record since1999, said
they were worried about inflation.
China's consumer price index (CPI) rose 3.2 percent in the first half of
this year, and the growth rate was 1.9 percentage points higher than the
year-earlier level.
Price hike for foodstuffs, mainly grain, meat and fowl and eggs,
contributed significantly to the rise. Statistics show that foodstuff
prices rose 7.6 percent, with grain price up 6.4 percent, egg price up
27.9 percent and prices for meat and fowl as well as related products up
20.7 percent in the first half.
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