NEWS | Wednesday, 20 February 2008

Record rate of inflation for China

Over the month of January consumer prices in China registered the highest increase since September 1996, rising by at least 7.1 percent.
According to international reports, figures on Chinese inflation published by the National Bureau of Statistics may be even lower than the real surge in cost of living. This may be due to the fact that in a price controlled economy, unofficial rises imposed by market abusers are concealed.
In practice, price increases in China are likely to contribute to pressures resulting in further global inflation. Analysts foresee that this latest surge is an indication that lifting price controls in China is hardly on the cards for its government. Austerity policies are also likely to pursue – especially in terms of currency appreciation, in order to hold down the cost of imports, not withstanding the U.S. economic slowdown.
Chinese economy buffs have described the situation as a threat to demand for Chinese exports, advising that it would be wiser to bring inflation under control, even to the detriment of economic control.
Food prices alone, according to official statistics, have climbed by 18.2 percent, as expected. This has been mainly attributed to poor harvests last year and the latest Chinese cold spell that damaged food production and distribution last month.
Producer prices, measured on goods upon production, rose by 6.1 percent. This particular increase has been mainly due to rises in fuel and raw material pricing, Chinese economists said.