Chinesepod - Official rules out?threat of big rise in inflation

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BIZCHINA / Top Biz News

Official rules out?threat of big rise in inflation

By Zhao Huanxin (China Daily)
Updated: 2007-09-05 09:02

There is no threat of high inflation despite recent steep rises in food
prices, a senior planning official said yesterday.

The rising consumer price index (CPI), driven up largely by more
expensive food, will become stable when pork prices stabilize, Bi
Jingquan, vice-minister of the National Development and Reform
Commission, told a press conference in Beijing.

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T he CPI - a key gauge of inflation - hit a 10-year high of 5.6 percent
in July and rose by an average of 3.5 percent in the first seven months
of the year, of which 2.9 percentage points were contributed by rising
food costs, he said.

Pork, in particular, was 70.3 percent more expensive year on year at the
end of August in 36 large cities, according to the commission's
statistics.

The rise was mainly because of a rise in animal-feed prices and the
blue-ear epidemic which shrunk the stock of pigs.

"There are ups and downs in the prices of other goods, but not a
continuous rise because demand has not vastly exceeded supply," he told
the news briefing held by the State Council Information Office.

"Therefore, there is no serious inflation."

The country has experienced only some structural short supply, such as
that of pork, but overall supply and demand in the economy is balanced,
he said.

A series of government measures are stabilizing pork prices, but this
does not necessarily mean the overall inflation rate will recede to the
full-year target of 3 percent in the short term, he said.

"The 3 percent target set at the beginning of this year is only a
guideline, it's natural that the actual data are below or above that
target."

Pork prices stabilized in the past three weeks because of improved
supply, but fluctuations in the meat market are inevitable, he said.

The odds are low that pork rates would continue to rise drastically for a
long time, he said.

The skewed supply-demand situation with livestock is expected to be
substantially balanced by mid-2008, he said.

Farmers have been given incentives - increased price and government
subsidies - to raise more pigs.

Meanwhile, supply of alternative food is sufficient. The output of
poultry, eggs and mutton has increased this year, he said.

The official ruled out the possibility of large volumes of pork imports
to ease prices.

The country produced 53 percent of the world's total pork last year. It
imported 30,000 tons and exported 95,000 tons through July this year.

"Because China is the world's largest pork producer, the country is very
unlikely to import pork by the millions of tons every year - there is
simply no country that could satisfy such as a huge need."

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