Experts call for revisions of China's rising CPI

19:52, January 21, 2010      

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Liu Qi, an advertising firm employee in Beijing for eight years, Thursday spent 80 yuan (11.7 U.S. dollars) at a supermarket. About a half went on food and the rest on daily necessities.

However, the biggest financial pressure for the 29-year-old is not food, but her plan to buy an apartment in the city as home prices had risen through the roof.

China's Consumer Price Index (CPI), the main inflation gauge, climbed 1.9 percent year on year in December, mainly boosted by food, rent and related prices, Ma Jiantang, director of the National Bureau of Statistics (NBS), said Thursday.

The CPI in November and December was lifted by rising consumption on the back of faster economic expansion, and food price hikes caused by winter weather, said Xiong Peng, a senior researcher with Shanghai-based Bank of Communications (BOC), China's fifth largest lender, Thursday.

A BOC report out Thursday predicted year-on-year CPI growth might stand between 3 percent and 4 percent in 2010.

"I have felt vegetable, egg and meat prices rise quickly after heavy storms and temperature drops in Beijing and neighboring provinces. But my food bill is still around 1,200 yuan per month. I don't have plans to curtail my food shopping list," Liu said.

Vegetable prices surged 16.4 percent in December from the previous month, Ma said, without specifying figures.

Another 1,300 yuan of Liu's income went on rent for her bedsit, power, water and maintenancee bills, accounting for more than a fifth of her monthly income.

"I spend about 1,000 yuan to party or dine out with friends, another 500 yuan on clothing and 200 on my cellphone credit each month. Most of my colleagues and classmates have similar situations. I can't save much. Buying a home is an unrealistic goal for me now, and to rent a bigger apartment is a luxury I can't afford," Liu said.

Second-hand home prices jumped about 43 percent near the southern Second Ring Road in Beijing last year where Liu lives, and apartment rents increased about 5 percent on average in this area, said Qin Rui, a senior analyst with Beijing-based 5i5j Real Estate Service.

The government has taken a series of tax, land and monetary measures in recent months to cool the property market, which has soared since February 2009 too much public complaint.

"I heard the inflation ratio was insignificantly bigger in November. I got a slightly bigger paycheck this year, but my income rise lagged behind home price and rental spikes," Liu said.

China's CPI fell 0.7 percent year on year in 2009. The CPI was up again in November by 0.6 percent from a year earlier, according to the NBS.

Source: Xinhua
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