China's consumer price index grows 2% in Q1, some fear inflation

16:23, April 19, 2010      

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China's consumer price index (CPI) increased 2.2 percent in the first quarter, a slightly more moderate increase compared with growth of 2.7 percent in February, according to the statistics disclosed by the National Bureau of Statistics (NBS) last week. A survey conducted by Shanghai Securities News and showed that over half of individual investors believed that the first-quarter CPI figure meant that inflation is coming.

In the survey, about 42 percent people surveyed said that they were concerned about the CPI.

Nearly 84 percent of those surveyed noted that they had little experiences of inflation. Since China’s free-market reforms in the 1980s, there have been three instances of inflation: the late 1980s, in mid-1990s and in 2007. Most individual investors, especially the young and middle-aged, lack experience.

More than 38 percent of those surveyed believe that investing in real estate was the best choice in times of inflation, and nearly 25 percent chose gold. Individual investors thought that the securities investment, insurance, bonds and deposits were less capable of overcoming inflation. Recently, some mutual funds launched "inflation funds," the sales of which on the first day hit over 100 million yuan, showing individuals' concerns for inflation and desire to beat CPI.

Market analysts pointed out that the rapid increase in commodity prices was the typical indicator of inflation. Inflation will be coming sooner or later with falling currency purchasing power after global interests are reduced and there is a massive influx of currency into the market. Hence, there is a trend in 2010 toward taking anti-inflation steps as a part of a financial-management strategy.

People's Daily Online


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