Stabilizing consumer prices a top priority: Wen

BEIJING – China’s inflation will be kept under control despite strong momentum from the recent surge in pork prices, authorities assured on Tuesday.

Inflationary pressures are already restrained but are yet to be eliminated, said Premier Wen Jiabao in a statement published on the central government’s website.

“Stabilizing the general level of consumer prices remains the top priority of our macroeconomic regulation,” Wen said during a visit to Northeast China’s Liaoning province on Sunday and Monday. “Prices will be effectively controlled when government policies take effect.”

Vice-Premier Li Keqiang also urged that prices be kept stable.

“(We must) cut logistics costs to help keep the overall stability of prices,” he said during a visit to Anhui province on Sunday and Monday. The rising prices of some products, such as vegetables, have been attributed to exorbitant transportation costs, calling for reforms of relevant fee-collecting policies.

He also called for “proper management of inflationary expectations”, China Central Television reported.

China’s consumer price inflation rose to a 34-month high of 5.5 percent in May from 5.3 percent in April. Economists forecast it could even exceed 6 percent in June, which would be the highest in about three years. The National Bureau of Statistics is scheduled to release the data next week.

“The peak of inflation could have come in June,” said Lian Ping, senior economist at the Bank of Communications. “It will gradually drop in the second half of this year, although the decline will be limited,” he said, citing the rising labor costs, brisk economic expansion and high international commodities prices.

Prices of food products are believed to have played a major role in driving up consumer inflation, with pork becoming the core element.

Pork prices rose 3.4 percent week-on-week in the week ending July 3, after an increase of 4.5 percent in the previous week, according to a Ministry of Commerce statement on Tuesday.

Prices have risen strongly since May – a traditionally slack season – mainly because of a cyclical domestic shortage of pigs and surging feed prices. Many farmers were reluctant to keep pigs due to low sales prices and diseases last year, causing a shortage of supply this year, experts say.

Year-on-year, pork prices rose about 54 percent at the end of May, according to a survey by the Ministry of Agriculture.

“However, the price of pork may have peaked in June, rising by about 60 percent,” said Gao Li, an analyst at Huachuang Securities, in a recent report. “It could be the highest in this round of pork price rises.”

Premier Wen said he has noticed the sharp rise in pork prices. The government is taking steps to ease inflation and “pork prices will start to drop in the coming months”, he said.

Wen and Li also said the building of low-cost affordable housing for low-income earners must be carried out strictly as scheduled and quality must be ensured. “The supervisory role of the media should be strengthened (in monitoring the quality of construction),” said Li.

Source: China Daily

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