Belts tightened on price rises
By Zhang Fengming |
March 17, 2010, Wednesday
|
Print Edition
Print Edition
CHINESE urban residents tightened their belts as they felt the pinch from higher prices, according to a central bank survey yesterday.
More than half of respondents - a record high since the central bank first conducted the national survey in 1999 in 50 major cities - said the current pricing is "too high to afford," the People's Bank of China said on its Website yesterday.
"The current pricing and interest rates have caused urban residents in China to cut their spending intention sharply and the contraction became more apparent from the second half of 2009," said the PBOC, which conducted the survey in 50 major cities in late February.
Only 25.9 percent of respondents said they feel comfortable with the current prices, down 2.3 percentage points from a quarter ago.
The Consumer Price Index, the main gauge of inflation, rose by a surprisingly faster 2.7 percent in February, close to China's annual inflation target of within 3 percent. Inflation in January was 1.5 percent. China's inflation figure excludes housing prices and is dominated by food, transport and health care costs.
Economists said they widely expect the PBOC to raise interest rates in the middle of this year, and February inflation may accelerate the central bank to raise the rate.
Respondents said they chose to save more or invest in the markets rather than spend.
The survey disclosed 43.6 percent of respondents said they will increase savings, up from 42 percent a quarter ago. About 41 percent of respondents said they will increase their investments in bonds, stocks or funds.
Only 15.3 percent of the respondents said they will spend more, down from 16 percent in the previous quarter, according to the survey.
In the survey, more than 70 percent of the respondents said they feel that home prices have risen too high.
"Even the high income earners stood up to complain of an over-priced home market," the PBOC said, without giving a definition of the high-income group.
Home prices in 70 major cities on the Chinese mainland jumped 10.7 percent last month from a year ago, accelerating from a 9.5 percent gain in January.
More than half of respondents - a record high since the central bank first conducted the national survey in 1999 in 50 major cities - said the current pricing is "too high to afford," the People's Bank of China said on its Website yesterday.
"The current pricing and interest rates have caused urban residents in China to cut their spending intention sharply and the contraction became more apparent from the second half of 2009," said the PBOC, which conducted the survey in 50 major cities in late February.
Only 25.9 percent of respondents said they feel comfortable with the current prices, down 2.3 percentage points from a quarter ago.
The Consumer Price Index, the main gauge of inflation, rose by a surprisingly faster 2.7 percent in February, close to China's annual inflation target of within 3 percent. Inflation in January was 1.5 percent. China's inflation figure excludes housing prices and is dominated by food, transport and health care costs.
Economists said they widely expect the PBOC to raise interest rates in the middle of this year, and February inflation may accelerate the central bank to raise the rate.
Respondents said they chose to save more or invest in the markets rather than spend.
The survey disclosed 43.6 percent of respondents said they will increase savings, up from 42 percent a quarter ago. About 41 percent of respondents said they will increase their investments in bonds, stocks or funds.
Only 15.3 percent of the respondents said they will spend more, down from 16 percent in the previous quarter, according to the survey.
In the survey, more than 70 percent of the respondents said they feel that home prices have risen too high.
"Even the high income earners stood up to complain of an over-priced home market," the PBOC said, without giving a definition of the high-income group.
Home prices in 70 major cities on the Chinese mainland jumped 10.7 percent last month from a year ago, accelerating from a 9.5 percent gain in January.
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