Economic Trend News
- Inflation pressure rising: institute
Date: 12-Oct-2007 Sources: (Shenzhen Daily)
THE country faces growing pressure for the economy to overheat and inflation to rise and government policy next year should focus on measures to stabilize prices, the top government policy research institute said Thursday.
The Chinese Academy of Social Sciences said in its autumn report, published by the Shanghai Securities News, that a range of long-term factors, not merely a spike in food prices, was behind rising inflation this year.
High investment and economic growth for the past several years, excessive liquidity in the money market, and rising wages and power generation costs helped to boost August consumer price inflation to a 10-year high of 6.5 percent, the institute said.
The report, which was broadly in line with recent statements by officials at the institute and other government bodies, predicted inflation of 4.5 percent for all of this year and only a modest drop to 4 percent next year.
'Controlling excessive rises in consumer prices and asset prices, and easing inflationary pressure, should be the main task of macroeconomic adjustment policy in 2008,'it said.
The institute forecast gross domestic product growth of 11.6 percent this year, up from 11.1 percent in 2006, and said growth might ease slightly to around 11.0 percent next year.
Economists expect data due Oct. 23 to show that consumer inflation eased slightly to 6.3 percent in the year to September.
The National Development and Reform Commission, the economic planning agency, said on its Web site that retail pork prices in 36 major cities fell 5.3 percent in September from August. It was the first monthly fall since April.
Rising prices for China's staple meat, spurred in part by an earlier outbreak of blue ear disease among hogs, have been one of the main reasons behind the recent spike in inflation.
Non-food inflation remains tame. Non-food prices rose just 0.9 percent in the year to August.
In a sign that firms in many industries continue to find it difficult to pass on rising prices for inputs, automaker Geely Automobile Holdings said Wednesday that it would cut prices of several economy models by between 3,000 yuan (US$400) and 9,000 yuan.
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