CPI soars to 28-month high of 5.1%
By Wang Yanlin |
December 12, 2010, Sunday
|
Print Edition
Print Edition
CHINA'S Consumer Price Index surged to a 28-month high in November, rising 5.1 percent from a year earlier, the National Bureau of Statistics said yesterday.
The main gauge of inflation beat the market's 4.8 percent expectation and followed a 4.4 percent jump in October.
Having anticipated a high rate, the central bank announced on Friday night the reserve requirement ratio for banks would be increased, freezing around 360 billion yuan (US$54 billion) to reduce liquidity.
"The sharp increase in the CPI is really unexpected," Sheng Laiyun, a spokesman for the bureau, said at a press conference in Beijing yesterday. Although he still contributed the bulk of the CPI's rise to higher food costs, he no longer said it was a structural type of inflation.
Food costs, which account for one-third of the CPI basket, rocketed 11.7 percent year-on-year last month, further picking up from 10.1 percent in October. The non-food sector accelerated 1.9 percent, up 0.3 percentage point from a month earlier.
Daily necessities have reported runaway price increases with fruit costs surging 28.1 percent, eggs 17.6 percent, cooking oil 14.3 percent and rice 11.7 percent.
"The government has ratcheted up its efforts to combat inflation," said Li Maoyu, an analyst at Changjiang Securities Co. "November's CPI figure may be the peak of this round of inflation, but the authorities can't loosen their grip over irregular price fluctuations, especially speculation."
Harsher penalties
The central government has increased the reserve requirement three times in the past five weeks, lifted the interest rate in October, released stockpiles of state-reserved food, imposed harsher penalties for speculation and streamlined the distribution of goods to prevent overpricing and stabilize supplies.
On Friday, the State Council, China's Cabinet, ruled that people hoarding food for speculation will be fined up to 5 million yuan.
But the outlook for future prices remained uncertain, analysts said, as the Producer Price Index, the factory-gate measure of inflation, also quickened to 6.1 percent from a year earlier last month, compared with a rise of 5 percent in October. Higher production costs are usually passed on to consumers when products reach stores.
Zhang Xiaojing, an expert at the Chinese Academy of Social Sciences, a government think tank, said the full-year 2010 CPI will exceed the government's target of 3 percent but will be below 3.5 percent.
"China faces great inflation pressures in the mid- and long-term. I suggest hiking rates," Zhang said.
China said on December 3 it will switch its monetary policy stance next year from "relatively loose" to "prudent" to tackle inflation while keeping economic growth sustainable.
On other fronts, China's economy in November performed stably.
Industrial production expanded 13.3 percent on an annual basis, 0.2 percentage point quicker than in October.
Urban fixed-asset investment grew 24.9 percent to 21.1 trillion yuan in the first 11 months, up 0.5 percentage point from the rate through October.
Retail sales also inched up 0.1 percentage point from October to grow 18.7 percent last month, according to the bureau.
The better-than-expected performance of the Chinese economy has prompted the Asian Development Bank to upgrade its forecast. It now predicts China's economy will grow 10.1 percent this year, up from an estimate of 9.6 percent in September.
China's gross domestic product expanded 10.6 percent year on year in the first three quarters to 26.8 trillion yuan to remain the world's second-largest economy.
The main gauge of inflation beat the market's 4.8 percent expectation and followed a 4.4 percent jump in October.
Having anticipated a high rate, the central bank announced on Friday night the reserve requirement ratio for banks would be increased, freezing around 360 billion yuan (US$54 billion) to reduce liquidity.
"The sharp increase in the CPI is really unexpected," Sheng Laiyun, a spokesman for the bureau, said at a press conference in Beijing yesterday. Although he still contributed the bulk of the CPI's rise to higher food costs, he no longer said it was a structural type of inflation.
Food costs, which account for one-third of the CPI basket, rocketed 11.7 percent year-on-year last month, further picking up from 10.1 percent in October. The non-food sector accelerated 1.9 percent, up 0.3 percentage point from a month earlier.
Daily necessities have reported runaway price increases with fruit costs surging 28.1 percent, eggs 17.6 percent, cooking oil 14.3 percent and rice 11.7 percent.
"The government has ratcheted up its efforts to combat inflation," said Li Maoyu, an analyst at Changjiang Securities Co. "November's CPI figure may be the peak of this round of inflation, but the authorities can't loosen their grip over irregular price fluctuations, especially speculation."
Harsher penalties
The central government has increased the reserve requirement three times in the past five weeks, lifted the interest rate in October, released stockpiles of state-reserved food, imposed harsher penalties for speculation and streamlined the distribution of goods to prevent overpricing and stabilize supplies.
On Friday, the State Council, China's Cabinet, ruled that people hoarding food for speculation will be fined up to 5 million yuan.
But the outlook for future prices remained uncertain, analysts said, as the Producer Price Index, the factory-gate measure of inflation, also quickened to 6.1 percent from a year earlier last month, compared with a rise of 5 percent in October. Higher production costs are usually passed on to consumers when products reach stores.
Zhang Xiaojing, an expert at the Chinese Academy of Social Sciences, a government think tank, said the full-year 2010 CPI will exceed the government's target of 3 percent but will be below 3.5 percent.
"China faces great inflation pressures in the mid- and long-term. I suggest hiking rates," Zhang said.
China said on December 3 it will switch its monetary policy stance next year from "relatively loose" to "prudent" to tackle inflation while keeping economic growth sustainable.
On other fronts, China's economy in November performed stably.
Industrial production expanded 13.3 percent on an annual basis, 0.2 percentage point quicker than in October.
Urban fixed-asset investment grew 24.9 percent to 21.1 trillion yuan in the first 11 months, up 0.5 percentage point from the rate through October.
Retail sales also inched up 0.1 percentage point from October to grow 18.7 percent last month, according to the bureau.
The better-than-expected performance of the Chinese economy has prompted the Asian Development Bank to upgrade its forecast. It now predicts China's economy will grow 10.1 percent this year, up from an estimate of 9.6 percent in September.
China's gross domestic product expanded 10.6 percent year on year in the first three quarters to 26.8 trillion yuan to remain the world's second-largest economy.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
