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People's Daily Online>>China Business

Soaring CPI in March drives up public inflation fears

(Global Times)

08:33, April 10, 2012

(Global Times Photo)

The nation's food prices soared in March and drove up inflation, official figures showed Monday, raising concerns that the government may not meet its inflation-control objective for the year.

According to the National Bureau of Statistics (NBS), the consumer price index (CPI) - a main gauge of inflation - rebounded 3.6 percent year-on-year in March, up from 3.3 percent a month earlier.

The data, slightly above previous market expectations of 3.3 percent, was driven up mostly by rising food prices, which surged 7.5 percent year-on-year. The price of pork and vegetables rocketed about 11.3 percent and 20.5 percent respectively.

Sheng Hongqing, chief economist for China Everbright Bank, said Monday that the CPI rebound had been predicted.

"3.6 percent will be the highest point for the remainder of the year, while in June and July, the prices will see an obvious drop," Sheng told the Global Times. "We forecast CPI growth next month at around 3.4 percent."

The CPI rise in March is still below the average increase of 3.9 percent seen in January and February combined. Chinese Premier Wen Jiabao said last month that the country would keep CPI growth below 4 percent this year.

However, Zhou Hao, a global market analyst from ANZ China, told the Global Times that rising fuel prices, although accounting for a small part of the CPI increase, had inevitably pushed up the costs of transportation and logistics.

According to a ANZ report Monday, ongoing reforms in the pricing mechanism of public utilities and resource products, such as water and power, will also likely further exacerbate pressures in the rest of the year.

"It is highly possible that inflation will rebound and easily exceed the government's target of 4 percent in the second quarter," the ANZ report said.

"Apart from price mechanism reforms whose effect will linger, some manufacturers have also passed hiking production costs onto consumers by increasing retail prices," Zhou noted.

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