Consumer prices facing new pressures
By Xu Dashan (China Daily)
Updated: 2004-11-03 21:44

China's consumer prices will face new upward pressures in the next few months, a senior researcher with the State Council's Development Research Centre said Wednesday.

Xie Fuzhan, deputy director of the centre, said the rising prices for means of production will bring upward pressure for the country's future consumer price index (CPI), policy makers' key inflation gauge.

Ren Xingzhou, director of the centre's institute of market economy, said the impact of oil and raw materials price rises on the CPI has already been felt during the first three quarters of this year.

The government has raised domestic oil prices three times since the beginning of this year because of high international oil prices, she said.

"The government is likely to further raise domestic oil prices in the fourth quarter," Ren said.

The country's coal prices will also stay at a higher level, due to the insufficient transportation capacity.

Meanwhile, the country is facing mounting pressure to raise the prices for public utilities such as water and electricity.

Beijing's local government has already raised water prices and is ready to raise prices for electricity, she said.

Local governments in other areas also have plans to raise prices for public utilities.

However, Ren said the country would still face serious inflation.

The CPI is expected to rise about 4 per cent this year, she said.

"The demand and supply situation of the country's consumer goods market will continue to turn for the better in the fourth quarter," she said.

Ren said grain prices were a major propeller of the CPI rise during recent months.

The government's measures to encourage grain production since the beginning of this year have achieved obvious results.

China's grain production will achieve this year's goal of 455 billion kilogram.

This represents an increase of 5.8 per cent compared with last year.

The increase in grain production and a certain amount of imports will help balance demand and supply.

However, the gap between demand and supply this year will not be completely solved.

Structural and regional problem existing in grain supply will continue to keep prices at a higher level.

Grain prices will increase about 20 per cent in the fourth quarter.

Close