Official: Excessive liquidity fueled price hike

14:56, November 11, 2010      

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The rising consumer prices facing China this year was the result of excessive liquidity, rather than inadequate supply, an official from the country's top economic planner said Wednesday.

CPI growth in the last three months of 2010 will remain high, but the growth rate might be smaller as tail-raising factors disappear, said Zhou Wangjun, deputy director of the National Development and Reform Commission (NDRC) pricing department.

Zhou predicted that CPI growth for all of 2010 will be "slightly" higher than the control target of 3 percent, and gave assurances that the government has abundant goods reserves and long experience to curb inflation.

Loose liquidity worldwide, natural disasters, rising labor costs and speculation factors were the reasons for the current upward trend for consumer products, he said.

"After the U.S. Fed announced the second round of the quantitative easing policy, commodity prices in the international market rose significantly," Zhou said, adding that China should restrict hot money from entering markets for daily necessities.

Prices of pork, vegetables, edible oil and cotton have been rising significantly in the second half of 2010, pushing the public's inflation expectations.

Earlier this year, the central government said that China targets a rise of consumer price of around 3 percent in 2010 and noted the goal leaves room for reform in resource and environment taxes and fees and in the pricing of resource products.

By People's Daily Online


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