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Cary Huang

Official data for June confirms rising trend

The mainland's food prices surged 11.3 per cent year on year last month due to a leap  of nearly 60 per cent in the cost of pork and increases of more than 30 per cent in the cost of other staples,  National Bureau of Statistics figures show.

The consumer price index  in rural  areas rose 5 per cent year on year last month, higher than the 4.1 per cent rise in urban areas, the bureau said yesterday.

On Thursday, it had announced that the CPI had risen 4.4 per cent  nationwide.

The June food data confirmed a  trend, following an 8.3 per cent year-on-year gain in May and a 7.1 per cent rise in April.

However, non-food prices rose just 1 per cent year on year last month, the bureau said.

Last month's increase in nationwide CPI  was the largest since October 2004. The central bank had said  it hoped to keep inflation below 3 per cent this year, but the CPI rose 3.2 per cent year on year in the first half.

Pork prices surged 59.8 per cent year on year last month, while prices for eggs rose 37.9 per cent, poultry and  meat 35.7 per cent and edible oil 27.6 per cent.

The Ministry of Commerce had said  that the wholesale price of pork rose 74.6 per cent year on year last month due to the increased cost of feed and a widespread outbreak of the contagious blue ear disease.

Ministry spokesman Wang Xinpei   last week said pork prices would continue to fluctuate due to rising costs,  despite government efforts to increase supply.

Premier Wen Jiabao  has warned of the danger of rising food prices on the mainland, saying further rises could spark social unrest.

The rising prices of pork and other food items have dominated media coverage over the past two months, triggering a debate on what the government should do to help the poor cope with inflation.

Residential property prices rose 4.4 per cent year on year last month, while rents were up 4 per cent. The property prosperity index, which considers  property prices, sales volume and consumer confidence, was at 103.63 at the end of June, up 0.7 points from a year earlier and 0.31 points from May, the bureau said.  The producer price index  rose 2.5 per cent year on year last month and by 2.8 per cent in the first half.

Ma Jun,  chief China economist with Deutsche Bank,  said the stable  PPI suggested that the inflationary pressure was not due to overheated investment.

'The government understands that pork-led CPI inflation cannot be addressed by policies restricting investment growth,' Mr Ma said.

Among the PPI components for last month, the prices of raw materials, fuel and power rose 3.4 per cent from a year earlier, while the price of crude oil declined by 6.6 per cent and  petrol dropped by 4.9 per cent.

Strong domestic demand due to rising incomes was also behind consumer inflation  as urban retail sales jumped 15.9 per cent in the first half to  2.85 trillion yuan, the bureau said.

Hard to swallow

Changes (%) in Consumer Price Index for June

Grain   up 6.1

Meat and poultry up 35.7

Pork up  59.8

Eggs  up 37.9

Fresh vegetables  up 4.8

Fresh fruit   down 16.2

Tobacco and alcohol  up 1.7

Transportation equipment down 2.4

Vehicle fuel and components  down 1.2

Telecoms equipment  down 18

Residential water, electrricity, fuel  up 3.6

SOURCE: NATIONAL BUREAU OF STATISTICS



Pork lifts mainland food prices sharply