Chinese Consumer Prices Rise in May From Year Before

Chinese consumer prices rose slightly in May from the same month last year, while cheaper food caused prices to fall compared with April.

The consumer price index, which has been used as the main price gauge since early this year, was up 0.1 percent in May versus the same month last year, the State Statistics Bureau said in a statement.

This is the first year-on-year rise since February and only the second in more than two years. In April, the index declined 0.3 percent from the same month a year earlier.

In the first five months of 2000, the index was stable compared to the same period a year ago, the bureau said.

Compared with April, the index was down one percent in May, led by a 20 percent fall in the price of fresh vegetables. Every part of China apart from Hainan island reported consumer prices had declined in May from the month before.

Food items take up a large percentage of most consumer baskets in China, and seasonal factors such as bumper harvests can cause significant fluctuations in the consumer price index.

Falling prices is one of the worst problems facing the Chinese government over the past couple of years, and the February rise in the consumer price index was the first in 22 months.

The falling prices have come about as companies pile up inventories of goods few people want to buy. Consumption is rising slowly in China as people are worried social reform will force them to pick up a larger part of the bill for health care, housing and education, and they prefer to save rather than go shopping.

The problem is compounded by occasional price wars as producers seek to slash prices to gain a competitive advantage.

Some manufacturers are teaming up to curb price-cutting. Nine TV manufacturers last week said they would cooperate and set a price floor for their products.

The retail price index, which deducts services and utilities from the consumer price measure, declined 1.9 percent in May from the same month a year ago, the bureau said.

In the first five months, it was down two percent from the same period last year. Compared with April, the May retail price index was down 0.9 percent.

People's Daily Online --- http://www.peopledaily.com.cn/english/