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August 28, 2009

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China to hold line on hikes in prices

CHINA'S top economic planner said yesterday the country will avoid large, widespread and long-term price rises as overall supply should match demand in the foreseeable future.

The National Development and Reform Commission said in a statement that a "surge in credit and continuous price rises of certain products and property resulted in rising inflation expectations in the country."

But sufficient material supply, such as ample reserves of grain, and competitive pressures would help stabilize prices, the commission said, without providing details.

The NDRC asked local authorities to step up price monitoring and to stabilize prices of important products, including food, gas and transportation.

Efforts should be made to avoid large price rises, the commission said.

Average pork prices nationwide stood at 17.79 yuan (US$2.60) per kilogram on Tuesday, up 3.3 percent from a week earlier. As of August 12, pork prices had risen for nine consecutive weeks, up 15.8 percent, according to the Ministry of Agriculture.

Prices of eggs on Tuesday were 7.83 yuan per kilogram, up 2.5 percent from a week earlier. As of last Sunday, egg prices had risen for five consecutive weeks, up 6.2 percent, the ministry's Website said.

The rises were a natural result of previous prices being too low, Lin Songli, an analyst at Guosen Securities, said yesterday.

The current average pork price was 23.5 percent lower than the same time last year and down 17.1 percent from the highest level this year.

"Pork and egg prices often acted as major driving force for inflation in the past, so though the price hikes pose no immediate threat to inflation, the government should be cautious," Lin said.


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