BEIJING — China is under great pressure amid imported inflation triggered by soaring international grain prices and oil prices, a senior economic planning official said on Wednesday.
The country has taken a series of measures to control climbing prices since the second and third quarters of last year, Xu Xianping, vice minister of the National Development and Reform Commission (NDRC), said at a press conference.
The measures, such as raising interest rates, increasing market supplies and cutting fees, have shown some results, Xu said.
The most obvious change has been a decrease in vegetable prices, Xu said.
Countering price hikes is a top priority for the country, and measures to keep prices down will be gradually carried out over time, Xu said.
The Consumer Price Index (CPI), a major gauge of inflation, rose to 5.3 percent in April, well above the government’s annual inflation control ceiling of 4 percent.
The May CPI is scheduled to be published on June 14.
Analysts: Consumer inflation to rise in May
Qiao Hong, an economist from Goldman Sachs, said the CPI will climb to 5.5 percent in May from 5.3 percent in April.
Rising food prices, particularly for pork, are the main reason for the predicted increase, she said.
Pork prices have been rising steadily since early May, as demand increased during the recent Dragon Boat Festival holiday.
Vegetable prices have also risen by nearly 20 percent, according to data from the National Bureau of Statistics.
Qiao expects food prices, which account for one-third of the CPI, to jump 12.1 percent in May from a year ago, higher than the 11.5 percent posted in April.
The China International Capital Corporation (CICC) also expects the CPI to rise to 5.5 percent, reports Shanghai Securities News. A lingering drought in south China will push up prices of aquaculture products, and non-food prices will continue to stay high, the company said in a report.
With higher inflation, analysts expect an interest rate hike to occur in June.
Economist Dong Xianan predicts that the rate hike will happen as soon as this weekend. Dong was quoted by the Shanghai Securities News as saying that the central bank is likely to hike the reserve requirement ratio (RRR) for commercial banks after macro-economic data is released next week.
The CICC said in its report that the government’s monetary tightening measures will continue in the third quarter.
The CPI hit a 32-month high of 5.4 percent in March. To curb the rising rate of inflation, the central bank has hiked its benchmark interest rates four times since last October, and raised the RRR for commercial banks five times this year to a record high of 21 percent.