Pork prices have CPI over a barrel

CHINA - Inflationary pressure continues to build with the consumer price index - a key gauge of inflation - surging 6.5 percent in August, the highest since December 1996.
calendar icon 12 September 2007
clock icon 2 minute read

The upward spiral, driven mostly by an 18.2 percent surge in food prices, followed the indicator's rise to a 10-year high of 5.6 percent in July, from 2.2 percent in January.

The stock market tumbled 4.5 percent on Tuesday as investors panicked at the news, fearing more tightening measures.

Prices of pork and other meat surged 49 percent; cooking oil, 34 percent; and eggs, 23.6 percent, the National Bureau of Statistics said yesterday. Prices of non-food products rose 0.9 percent, the bureau said.

Inflation for the first eight months reached 3.9 percent, and economists and government organizations forecast that the CPI for the whole year will surpass 3 percent, the target set by the central government.

Facing mounting price pressures, central bank governor Zhou Xiaochuan told a meeting in Switzerland on Monday that "curbing inflation is our objective".

Goldman Sachs' Asia Economics Research Group expects the People's Bank of China (PBOC) to further tighten monetary measures.

The bank has raised interest rates four times this year, with the latest on August 21, when the benchmark one-year deposit rate was raised to 3.6 percent.

Source: China Daily

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