Top Biz News

Price hikes stoke inflation fears

By Fu Jing (China Daily)
Updated: 2006-07-26 08:09

Rising prices for oil and raw materials may lead to further price increases of daily commodities and raise the spectre of inflation, a senior economic planning official warned yesterday.

Zhu Hongren, an official in charge of economic growth at the National Development and Reform Commission (NDRC), the top economic planner, said the country is under the pressure of an increase in consumer product prices.

"It's one of the problems China faces besides the spree in fixed asset investment," Zhu told a press conference organized by the commission yesterday.

Crude oil prices have been hovering over US$70 per barrel, or more than 40 per cent higher than in the same period last year; and copper soared to 85,550 yuan (US$10,700) per ton in mid-May, more than double last year's price.

"The price rises of raw materials have increased costs for producers and will eventually push up prices of finished products," said Zhu.

However, Han Yongwen, the NDRC's spokesman, ruled out immediate monetary measures, such as an interest rate rise, to curb the trend.

The economy grew by a sizzling 11.2 per cent in the second quarter of the year, the fastest rate in a decade.

Zheng Jingping, spokesman for the National Bureau of Statistics, also warned last week that consumer prices are quite likely to rise in the second half, although inflation is forecast to remain moderate.

The consumer price index (CPI) grew 1.2 per cent, 1.4 per cent and 1.5 per cent in April, May and June respectively.