The government has started to temporarily intervene in the
market to control the prices of a range of daily necessities such
as grain and meat, and rein in inflationary pressure.
The prices of grain products, edible oil, pork, beef, mutton,
milk, eggs and liquefied petroleum gas are being monitored and any
rises have been subject to government approval from Tuesday, the
National Development and Reform Commission, the top economic
planner, said yesterday.
The move highlights rising concern about the surging consumer
price index - a key gauge of inflation - which jumped 6.9 percent
last November, the highest in a decade.
The NDRC said it expects to help curb "unreasonable price hikes"
and reduce "inflation expectations of the public".
Major producers need to obtain government approval before
raising their prices; and major wholesalers are required to file a
statement to government agencies if they raise prices by 6 percent
within 10 days or by 10 percent within a month.
"The measures will be lifted once prices ease," said the
commission. "But for now, it's necessary for the government to
intervene as the prices of some products have risen
substantially."
The CPI is expected to reach 4.5 percent for the whole of 2007,
the China Academy of Social Sciences has forecast. Food, which
accounts for a third of the CPI basket, has been the main driver of
inflation.
According to the NDRC, retail prices of soybean oil, pork, beef
and mutton climbed 58 percent, 43 percent, 46 percent and 51
percent year-on-year in the first half of this month.
"Surging food prices have put a strain on low-income residents,"
said Wang Tao, a Beijing-based economist with Bank of America. "The
temporary measure came about partly because the government is
trying to prevent large price increases in the run-up to the Lunar
New Year."
The Ministry of Commerce said earlier that the authorities would
continue to release stockpiled pork in the retail market before the
Lunar New Year holiday, which starts February 6.
The NDRC noted the intervention is not a "price freeze" and it
only intends to intervene in cases of "unreasonable price
adjustment".
According to the economic planner, some firms are hoarding
goods, raising prices arbitrarily or spreading rumors about price
rises to stoke panic buying.
The State Council, the Cabinet, passed new rules to impose
tougher penalties on price manipulators last Wednesday. It also
decided to freeze prices of public utilities, such as water and
electricity, and gasoline.
(China Daily January 17, 2008)