Govt alters CPI tracking (2)

10:40, February 16, 2011      

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<center class="t091105">Graphics: AFP/GT

Hailing the changes, Guo Tianyong, director of the Research Center of China Banking at the Central University of Finance and Economics, said the new way of calculating the CPI is aligned with international practices and will help reflect citizens' expenditures more objectively and comprehensively.

However, worries still remain over mounting inflationary pressure.

Gu Shengzu, an economist and a member of the Standing Committee of the National People's Congress, warned earlier this year that inflation expectations would lead to economic fluctuations and cause some people to panic, especially the poor.

The year-on-year CPI inflation for November hit 5.1 percent - a record high over the previous 26 months.

Back in December, Zhang Ping, director of the National Development and Reform Commission, reportedly said the central government was planning to cap this year's CPI rise at 4 percent.

Businesses are already seeing the negative effects of price hikes.

Wang Daqiang, a vendor from Shandong Province who has been selling vegetables in Beijing for more than five years, told the Global Times Tuesday that his profits have shrunk.

"Wholesale vegetable prices have been on the rise in recent months. We're caught in the middle. If we increase our retail prices even a little, sales dip immediately," Wang said, adding that the situation had forced some of his friends to close shop.

The soaring prices have persisted in real estate as well, with monthly rents reportedly surging by 10 to 20 percent recently in major cities across the country.

Specifically citing the increased migration by workers into major cities, L Yiming, a housing agent at Beijing Homelink, said, "The rent for a standard one-bedroom apartment in Beijing has risen from 2,000 yuan ($303) a month last year to 2,500 yuan a month this year."

China this month lifted the benchmark one-year deposit rates by 25 basis points to 3 percent - its second increase in just over six weeks - intensifying the battle against stubbornly high inflation that threatens to unsettle global markets.

"Mounting inflation concerns will continue to prompt tightening moves, though imminent risks are lower," Chang of Barclays Capital said.

Song Shengxia and Zhu Shanshan contributed to this storySource: Global Times
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