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.
The price rises for raw materials, fuel and power could speed up consumer
price increases, he said.
Consumers are already feeling the pinch.
A recent national survey of 20,000 households in 50 cities conducted by the
People's Bank of China, the central bank, found that one in every four urbanites
thinks prices for goods and services are "rather high and unacceptable."
Some experts, however, do not believe inflation is