CPI rises 4.9% in January, inflation lingers

10:30, February 15, 2011      

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China's consumer price index, or inflation, rose 4.9 percent year-on-year in January, despite a revision of the weighing of different products and services by the National Bureau of Statistics beginning this year.

The steady rise of inflationary pressure, from 4.6 percent in December, is expected to force the policymakers to put on the brakes and tighten monetary polices in the first quarter this year.

The People's Bank of China, the central bank, raised the benchmark interest rates on February 9 by 0.25 percentage points, the third hike since October.

Experts say that China's current one-year deposit rate of 3 percent cannot keep pace with the higher inflation rate of 4.9 percent. They have called for the authorities to have the courage to push real saving rates, now at negative 1.9 percent points, into positive territory.

And, the National Bureau of Statistics said PPI, a gauge of industrial inflation, jumped by 6.6 percent in January, which will be translated to CPI rises in the coming months.

Following last week's move on interest rates, the central bank is expected to raise the commercial banks' reserve requirement ratios (RRR) later this month to control money supply and inflation. Currently, China's biggest banks are required to reserve 19 percent of their savings at the central bank.

Among the major causes of inflation in January, prices of food products rose 10.3 percent year-on-year, followed by housing prices, which rose 6.8 percent, and medical care costs, growing 3.2 percent.

People's Daily Online


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