Turning point imminent for China's price rises

14:18, July 23, 2011      

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China's current inflation cycle is approaching a "turning point," an official with the country's top economic planner said Friday.

Zhou Wangjun, vice director of the pricing department of the National Development and Reform Commission, said he was optimistic about the situation of consumer prices in the second half of the year.

"Imported inflation pressure will ease after September as the international commodity prices have seen significant declines from their April levels," Zhou said in an online interview with the government website (www.gov.cn).

The country's monetary policies will also play a positive role in capping soaring prices, he said.

The consumer price index, a main gauge of inflation, rose by a three-year high of 6.4 percent in June from a year earlier, accelerating from May's 5.5-percent increase.

To soak up the liquidity that helps fuel inflation, the central bank has raised the benchmark interest rates three times this year and increased the reserve requirement ratio six times, ordering banks to keep a record high of 21.5 percent of their deposits in reserve to rein in excess lending.

Zhou also noted that economic growth and price rises are like "twin sisters" and the two will move in the same direction. "The key is to control price rises at acceptable levels," he said.

"For example, if the economy grows by 10 percent, then it is reasonable for consumer prices to rise between 3 to 5 percent," he said.

China is targeting economic growth of 8 percent for this year and plans to keep the annual consumer price increases at around 4 percent.

Source:Xinhua
 
 
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(Editor:黄蓓蓓)

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