China's consumer price index (CPI) is expected to move out of negative territory, preventing a further downward slide in prices, a senior official of the State Development Planning Commission has predicted.

Wang Yang, vice-minister of the Commission, has pledged to use price leverage to check deflation, guide investment and increase consumers' confidence.

Wang said the government will stick to its policy of keeping a fast growth in fixed assets investments and continue its efforts in stimulating domestic consumption.

Prices of transportation, apartments rentals and education will be raised while "taking the consumers' endurance into full consideration," so as to promote the service industry and infrastructure construction, according to Wang.

The CPI slid 0.2 per cent in January. The corresponding figure was 1.2 per cent last January. Retail prices in 12 regions including Beijing, Shanghai, Guangdong have begun rising, committee sources revealed.

However, Wang said their efforts will not pay off easily as the oversupply of commodities, especially food, will not undertake drastic changes soon.

Over-capacity, market gluts, and weak consumer demand have lowered China's retail price index for 21 months in a row, ending in 1999.

Wang blamed the drop in food prices, which accounts for nearly half of the CPI, as a major cause of deflation.