China's key inflation indicator surged to an 11-year high of 6.9
percent in November on food price increases, triggering fear the
ongoing inflation will become more evident.
In the meantime, the country reported a surplus of 26.28 billion
U.S. dollars in foreign trade for November, according to figures
released by the General Administration of Customs later on
Tuesday.
The November surplus was less than the record 27.05 billion U.S.
dollars recorded in October, indicating that the government's macro
control efforts to rein in trade surplus have begun to pay off.
While it still takes time to slow its sizzling exports, the task
for the country to tame inflation seems more arduous at
present.
"The latest figure indicates accelerating inflation pressure,"
NBS chief economist Yao Jingyuan told Xinhua. He said price
jumps for foodstuffs, which have a 33 percent weighting in China's
CPI, and oil price increases were the major driving forces behind
the rise.
Food prices ballooned 18.2 percent in November from a year
earlier, compared with 17.6 percent in October.
The bureau said food prices drove up the November CPI figure by
5.94 percentage points.
Grain prices rose 6.6 percent over the same period last year,
while cooking oil prices increased 35 percent. Pork prices, blamed
for the recent increase in CPI figures, soared 56 percent.
Non-food prices, however, rose only 1.4 percent, though higher
than 1.1 percent in October, according to the bureau.
November was the ninth consecutive month the CPI had risen by
more than three percent, the government-set alarm level for the
current year.
"The CPI figure will remain at a high level in the coming
several months," said Tang Min, the chief economist with the Asian
Development Bank (ADB) mission in China. He added pork prices were
not expected to fall until the end of the breeding cycle.
China has been subsidizing pig breeders and insuring female pigs
to boost farmers' enthusiasm for raising more of the animals. The
country was hit by a pork shortfall that was triggered by a pig
cull following the outbreak of blue-ear disease.
However, Lu Zhongyuan, director of the Macroeconomic Research
Institute of the Development Research Center of the State Council,
said the country was still short of pork as farmers remained
reluctant to raise more of the animals for fear that they would
lose a fortune in future pork price drops.
The country's pork prices picked up again in November despite a
moderate decline in September and October.
In the period between January and November, the accumulative
increase of the main inflation indicator stood at 4.6 percent, the
bureau said.
China's consumer price index was forecast to be around 4.7
percent for the year. It would be the highest yearly figure since
1997, the NBS' Yao said. The previous record for annual CPI
increase was 8.3 percent in 1996.
The ADB's Tang said the country would have to accelerate its
tightening moves. "The central bank will raise interest rates once
or twice in the future and they will act very soon."
The central bank announced on Saturday it would raise the
reserve-requirement ratio for commercial banks for a 10th time this
year. It had also raised interest rates five times.
Amid efforts to tame inflation, China announced in September it
would freeze prices of major consumer products subject to
government controls or regulations.
The country was forced, however, to raise prices of gasoline,
diesel and aviation kerosene by nearly 10 percent from Nov. 1 amid
a supply shortfall.
It said the oil price increase contributed only 0.05 percentage
points to the monthly consumer price index.
To cap price rises, China also said it would boost production of
necessities and major agricultural products, clampdown on price
rigging and extend allowances to low-income residents.
The November consumer price index (CPI) figure was also higher
than the prevalent market prediction of 6.6 percent. Some analysts
have started to worry that China's economy, which has achieved the
rare double of high growth and low inflation over the past 10
years, may have to be seriously bothered by the spectrum of
inflation.
Its inflation rate was kept within a desirable range over the
past few years at 1.2 percent in 2003, 3.9 percent in 2004, 1.8
percent in 2005 and 1.5 percent in 2006. But things changed
substantially this year.
The NDRC's Bi said China was under great pressure to curb price
rises in 2008. "It is really a big challenge ahead."
Analysts added China would have to revise its inflation target
to a higher level for 2008, and that a target below the yearly
figure for the whole of 2007 would be desirable.
(Xinhua News Agency December 11, 2007)
