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Food prices prompt watch on inflation

By Xu Binglan, Xie Chuanjiao and Qin Jize (China Daily)
Updated: 2006-12-12 08:35

Central government agencies have pledged to closely monitor any possible inflation after recent reports about food price increases.

At an international conference inBeijing, Zhou Xiaochuan, governor of the People's Bank of China (PBOC), said even though China'sconsumer price index (CPI) now remains low and within an acceptable band, there is likelihood that inflation may "raise its head" at any time.

Zhou said the PBOC "has to remain concerned" about the CPI.

Related readings:  Inflation in China jogging along at 1.3% Consumer price index up 1.9 pct in November China price pressures 'in check' PBOC alert on rising non-food CPI

Fluctuation on the global market could also affect domestic prices, he added.

His remarks coincide with the release of a report by the Rome-based Food and Agriculture and Organization (FAO) of the United Nations that the surge in the world's cereal prices this year had reached "levels not seen for a decade."

According to figures from the National Bureau of Statistics (NBS), last month, China's CPI rose 1.9 per centyear on year, as compared to investment analysts' forecast of 1.5 per cent.

Most economists interviewed by China Daily said that during the festival season from December to February, the price of all food items would probably remain high.

NBS figures show the CPI last month rose 1.8 per cent in urban areas and 2.1 per cent in rural areas, indicating higher prices for farm products.

In fact, food prices recorded the highest rise, up 3.7 per cent year on year, as compared to only 1 per cent for non-food items.

Cereals were up 4.7 per cent, edible oil 6.2 per cent, meat and poultry 7.6 per cent, and eggs 11.7 per cent.

The central government has moved to stabilize grain prices in the last couple of weeks by releasing State grain stocks to the market.

The move is necessary for maintaining social harmony, especially during the festival season, Wang Jinmin, an official with the State Council Development Research Centre, told China Daily.

Grain price rises are likely to level off in a few weeks. But fruit and vegetable prices will continue to edge upwards, according to a forecast by theMinistry of Commerce.