China says no imminent risk of inflation
Friday, 28 August 2009
BEIJING, Aug 27 (AFP): China's top economic planning agency said Thursday there was no imminent threat of a spike in inflation, but it urged officials at all levels to be on the look-out for sudden price rises.
The statement from the National Development and Reform Commission came as the world's third-largest economy continued to show signs it was emerging from the global crisis, with concerns surfacing of a return of inflation.
"Basically, overall supply and demand in the economy are in balance," the commission said in a statement posted on its website.
"At the moment, there is no risk of a comprehensive, lasting and large-scale rise in the price level."
But at the same time, the commission warned a recent pick-up in important sectors of the economy had prompted many Chinese to expect future price rises.
"Inflationary expectations in society have strengthened as the prices of a small number of commodities have gone up, while bank loans have risen and stock prices have rebounded," the commission said.
Inflationary expectation can by itself lead to new inflation, as people predicting future price rises will demand higher pay, in turn making products more expensive.
"Officials at all levels should... help detect symptoms such as abnormal price hikes in the market in a timely manner," the commission said.
China's consumer price index, the main inflation gauge, has fallen six months in a row, dropping 1.8 percent in July from a year earlier.
However, signs of a recovery of China's export-dependent economy have triggered new warnings that inflation could be imminent.
The central bank warned late last month that a rebound in inflation was possible in the second half of the year.
China's economy grew 7.9 percent in the second quarter, up from 6.1 percent in the first three months.
The statement from the National Development and Reform Commission came as the world's third-largest economy continued to show signs it was emerging from the global crisis, with concerns surfacing of a return of inflation.
"Basically, overall supply and demand in the economy are in balance," the commission said in a statement posted on its website.
"At the moment, there is no risk of a comprehensive, lasting and large-scale rise in the price level."
But at the same time, the commission warned a recent pick-up in important sectors of the economy had prompted many Chinese to expect future price rises.
"Inflationary expectations in society have strengthened as the prices of a small number of commodities have gone up, while bank loans have risen and stock prices have rebounded," the commission said.
Inflationary expectation can by itself lead to new inflation, as people predicting future price rises will demand higher pay, in turn making products more expensive.
"Officials at all levels should... help detect symptoms such as abnormal price hikes in the market in a timely manner," the commission said.
China's consumer price index, the main inflation gauge, has fallen six months in a row, dropping 1.8 percent in July from a year earlier.
However, signs of a recovery of China's export-dependent economy have triggered new warnings that inflation could be imminent.
The central bank warned late last month that a rebound in inflation was possible in the second half of the year.
China's economy grew 7.9 percent in the second quarter, up from 6.1 percent in the first three months.