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Inflation to dog China for a long period, analyst says
By Wang Yanlin |
April 20, 2011, Wednesday
|
Online Edition
Online Edition
CHINA may have to grapple with inflationary pressure for a long time ahead, market watchers said today at a forum.
"Ample liquidity, growing prices of imports and robust domestic demand will work together to keep inflation at a high level this year," said Wang Jun, a researcher at the China Center for International Economic Exchanges, a major think tank in the country.
"Some analysts expect consumer prices will moderate in the second half, but my projection is that it will remain high."
China's Consumer Price Index, the main gauge of inflation, rose to a 32-month high of 5.4 percent from a year earlier in March. To curb inflation, the People's Bank of China again ordered commercial banks to put aside more money as reserves last Sunday.
Since the start of this year, China has raised interest rates three times and deposit reserve ratio four times. However, the inflationary pressure seemed yet to be contained.
After major Chinese cities restricted people from buying properties for speculation, quite a lot of funds channeled into commercial goods sector, fueling the already high inflation driven by rising prices of agricultural products, Wang said.
Surging oil prices and rising costs of commodities on the global market, as well as the second quantitative easing (QE2) in the United States, created more imported inflation in China, Wang added. He suggested that the government keep a tight monetary policy and control money supply in the coming months to combat inflation.
"Ample liquidity, growing prices of imports and robust domestic demand will work together to keep inflation at a high level this year," said Wang Jun, a researcher at the China Center for International Economic Exchanges, a major think tank in the country.
"Some analysts expect consumer prices will moderate in the second half, but my projection is that it will remain high."
China's Consumer Price Index, the main gauge of inflation, rose to a 32-month high of 5.4 percent from a year earlier in March. To curb inflation, the People's Bank of China again ordered commercial banks to put aside more money as reserves last Sunday.
Since the start of this year, China has raised interest rates three times and deposit reserve ratio four times. However, the inflationary pressure seemed yet to be contained.
After major Chinese cities restricted people from buying properties for speculation, quite a lot of funds channeled into commercial goods sector, fueling the already high inflation driven by rising prices of agricultural products, Wang said.
Surging oil prices and rising costs of commodities on the global market, as well as the second quantitative easing (QE2) in the United States, created more imported inflation in China, Wang added. He suggested that the government keep a tight monetary policy and control money supply in the coming months to combat inflation.
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