|
Consumer prices rise 5.3% in August
By Xu Dashan (China Daily)
Updated: 2004-09-13 23:50
China's consumer prices registered a 5.3 per cent year-on-year increase in
August, putting more pressure on the central bank to raise renminbi interest
rates for the first time in nine years.
The consumer price index (CPI), policy-makers' key inflation gauge, was the
same as in July, but higher than the forecasts made by many economists.
"This is much higher than what I predicted," said Qi Jingmei, an economist
with the State Information Centre, who has monitored changes in CPI for years.
"If there are no new factors pushing up prices, CPI should be about 5 per
cent," she said.
But higher food and public utility prices during the month kept CPI at a
relatively high level, she said.
Prices for public utilities such as water, electricity and fuel rose 9.6 per
cent year-on-year in August, the statistics bureau said.
Grain prices rose 31.8 per cent, and egg prices increased 30.3 per cent, the
bureau said.
Prices for fresh vegetables rose 5.8 per cent year-on-year, it said.
August's CPI was also slightly higher than the 5.2 per cent growth predicted
by Zhu Jianfang, an economist at China Securities.
"The higher CPI will continue in the coming one or two months," he said.
People's Bank of China Governor Zhou Xiaochuan said last week the central
bank would decide whether to raise the interest rate or to resort to other
tightening measures after the National Bureau of Statistics released August's
major economic figures.
"But there are contradictions in the August figures," Zhu said.
Raising interest rate possible
While the CPI was at a higher level, the industrial output growth picked up
in the month.
Growth in fixed-asset investment and money supply also slowed in August.
"There is a possibility that the central bank will raise the renminbi
interest rate this year," Zhu said.
Niu Li, another economist at the State Information Centre, said the
government should keep a close watch on further price rises, because the price
pressure is already very great.
"Food prices remain at a higher level, and international oil prices have
risen rapidly," he said.
International oil prices rose to as much as US$49 per barrel during the past
few weeks.
"There are also signs that raw material prices may rebound," he said.
According to Qi, the price rise would have a certain negative impact on
ordinary people's lives.
Chinese people have already suffered a negative interest rate, due to the
higher CPI, she said.
"The negative interest rate would result in people's lower expectations for
the future," she said.
She cited a recent survey by the central bank as saying that people's level
of satisfaction with the current consumer prices dropped to its lowest level
since 1999.
The negative interest rate also leads to a decline in bank deposits, she
said. "This will make their purchasing power drop."
An average low-income urban family had to pay an extra 34.2 yuan a month
(US$4.1) on food during the first five months of this year, due to the increased
price of grain and its related products such as eggs and meat. This extra
expense accounted for 14.8 per cent of the family's monthly expenditure on food.
"Some low-income families have even begun to worry whether their incomes are
able to meet the basic needs for food and clothing," Qi said.
"Their health could also be at risk, because they will buy the cheapest
products and not pay much attention to the quality of food."
Qi added that the impact of the price rise was greater in rural areas.
Although farmers' per capita cash income rose 16.1 per cent year-on-year
during the first half of 2004, retail sales in the rural areas grew only 9.1 per
cent. The growth rate was 5.6 percentage points lower than the urban areas.
The government should not neglect ordinary people's feelings and interests,
she said.
The government should manage to raise the renminbi interest rate to increase
people's confidence in the future.
| |
 |
|
|
|
|
Today's
Top News |
|
|
|
Top China
News |
|
|
|
|
|
|
|
|
|
