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Shanghai inflation hits 3-year high last month
By Wang Yanlin |
June 16, 2011, Thursday
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Online Edition
Online Edition
SHANGHAI'S inflation rate soared to a three-year high in May while manufacturing growth moderated and fixed asset investment waned.
Analysts said such economic complexities will require policymakers to offer new incentives to stimulate the economy and keep monetary tightening in place to curb inflation.
Consumer Price Index, the main gauge of inflation, expanded 5.3 percent from a year earlier in May, compared with 5.1 percent in April and 4.7 percent in March, the Shanghai Statistics Bureau said.
But it looked better than the national inflation rate of 5.5 percent in May, the highest in 34 months.
The city's price inflation was fueled by a 10.3-percent jump in food costs, among which rice rose 15.7 percent year-on-year, meat climbed 18.2 percent and edible oil rocketed 20.1 percent. In contrast, vegetable prices dropped 6.1 percent due to government incentives to boost supply and lower retail prices.
"Inflation, especially soaring prices of daily necessities like food, will deal a big blow to ordinary families and make them spend less in other fronts," said Li Maoyu, an analyst at the Changjiang Securities Co. "It requires policymakers to gear up efforts and maintain its tightening policy."
Sheng Laiyun, a spokesman at the National Bureau of Statistics, said on Tuesday that governments at all levels should put control of prices at the top of their agenda.
Hours after Sheng's remarks, the central bank announced to raise bank reserve requirement ratio for the sixth time this year. Starting Monday, commercial banks will have to set aside a record 21.5 percent of fund as reserves to reduce liquidity on the market.
However, a tightening monetary policy also led to a slowdown in industrial growth and fixed-asset investment.
Shanghai's industrial production last month edged up 5.5 percent from a year earlier to 261 billion yuan (US$40.2 billion), compared with 9.7 percent in April and 12.4 percent in March.
Analysts said such economic complexities will require policymakers to offer new incentives to stimulate the economy and keep monetary tightening in place to curb inflation.
Consumer Price Index, the main gauge of inflation, expanded 5.3 percent from a year earlier in May, compared with 5.1 percent in April and 4.7 percent in March, the Shanghai Statistics Bureau said.
But it looked better than the national inflation rate of 5.5 percent in May, the highest in 34 months.
The city's price inflation was fueled by a 10.3-percent jump in food costs, among which rice rose 15.7 percent year-on-year, meat climbed 18.2 percent and edible oil rocketed 20.1 percent. In contrast, vegetable prices dropped 6.1 percent due to government incentives to boost supply and lower retail prices.
"Inflation, especially soaring prices of daily necessities like food, will deal a big blow to ordinary families and make them spend less in other fronts," said Li Maoyu, an analyst at the Changjiang Securities Co. "It requires policymakers to gear up efforts and maintain its tightening policy."
Sheng Laiyun, a spokesman at the National Bureau of Statistics, said on Tuesday that governments at all levels should put control of prices at the top of their agenda.
Hours after Sheng's remarks, the central bank announced to raise bank reserve requirement ratio for the sixth time this year. Starting Monday, commercial banks will have to set aside a record 21.5 percent of fund as reserves to reduce liquidity on the market.
However, a tightening monetary policy also led to a slowdown in industrial growth and fixed-asset investment.
Shanghai's industrial production last month edged up 5.5 percent from a year earlier to 261 billion yuan (US$40.2 billion), compared with 9.7 percent in April and 12.4 percent in March.
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