Vegetable prices fall after control measures

PUBLISHED : Friday, 10 December, 2010, 12:00am
UPDATED : Friday, 10 December, 2010, 12:00am

Vegetable prices have begun to drop after months of increases that account for a large part of consumer price inflation on the mainland.

In its weekly monitoring report released on Tuesday, the Ministry of Commerce said average wholesale prices of 18 vegetables fell by 5.4 per cent last week from the week before. Data released on Monday by the National Bureau of Statistics also showed that prices of major vegetables in 50 cities across the mainland had declined in the second half of November.

The drop followed the imposition by the central government of price controls to address growing social discontent.

The State Council issued 16 measures to stem price rises on November 20, with cheaper farm produce its key goal. That came three days after it suggested to local governments that they temporarily regulate prices of key daily necessities and materials used in agricultural and industrial production where necessary.

The Ministry of Agriculture yesterday forecast that farmers would devote 6.8 per cent more land to growing vegetables this winter and spring than a year earlier, and said supplies would be ample.

Xu Jianlan, a housewife in Hangzhou, Zhejiang , said green vegetables had become much cheaper since early November.

'Chinese cabbage is only one kuai per jin (2 yuan per kilogram). In past years it could be several kuai. There's also one stall that sells cheaper vegetables in every major vegetable market in Hangzhou.'

Wang Yongxin, who runs a small restaurant in Beijing's Yuminli community, said that, compared with October, vegetable prices had dropped a little. Even so, he raised prices on his menu. 'Rice, flour, oil, seasoning ... Everything has become more expensive, not just vegetables. So I have no other choice but to follow the trend,' he said.

Mainland residents have seen the price of nearly every daily necessity rise. Clothing is much more expensive following a dramatic rise in cotton prices; homes remain unaffordable despite government intervention; and high fuel prices have made travel more costly. An acute shortage of diesel drove up the price of the fuel.

Despite the recent moderation, experts were still cautious about commodity prices. Li Guoxiang , a researcher at the Chinese Academy of Social Sciences' (CASS) Rural Development Institute, said the prices of farm produce would remain high in the coming months, including the Lunar New Year. 'Winter came later than usual this year, which provided better weather for farm production, but prices could rebound even higher once rain comes in the festive season,' he said.

Wang Tongsan , director of CASS' Institute of Quantitative and Technical Economics, warned that the three periods of inflation the mainland had seen since 2000 were all triggered by rapid increases in the prices of agricultural products.

The first one began in 2003 after the Sars outbreak, when grain price increases took the lead. The second happened in 2007 and was triggered by big increases in pork prices after blue ear disease caused supplies to fall.

'This time it was triggered by price hikes in some non-staple farm produce,' Wang said. 'So the weakness in the agricultural sector has not changed ... And before it's fundamentally improved, it could still be a major factor in pushing up inflation.'