Planning body hints at higher inflation

SENIOR officials have hinted that containing inflation to 10 per cent this year will be almost impossible.

In a report to the National People's Congress (NPC), the State Planning Commission said it anticipated an ''extremely arduous'' battle against inflation.

The commission said prices had stayed high since the start of this year after a rebound of inflation in November and December.

Steadily increasing grain price rises were pushing inflation, the commission said.

The commission said Beijing also recently drew from the grain reserve to provide relief to some disaster and poverty-stricken regions.

''Although grain prices have receded from high levels it will be extremely difficult to keep it to a lower level,'' the commission said. ''It is anticipated that grain prices across the country will stay at the present high level or above.'' Prices of vegetables, meat, consumer products such as shoes, home appliances and publications as well as raw materials for agriculture including fertilisers had continued to rise.

Looking ahead, it said high overall demand would continue to put great pressure on prices.

Excessive growth in fixed-assets investment and money supply last year would continue to make an impact.

The commission predicted that the growth in consumption would outstrip last year's increase.

And last year's deregulation of price controls over many basic goods would begin to influence production costs.

Moreover, the State Planning Commission warned that there was no room for optimism for the so-called ''vegetable basket'' project aimed at ensuring adequate supply of non-staple food this year.

Much farming land had been taken over by urban development.

''It will take time for the various measures to boost the supply of grain, cotton, edible oil and other non-staple food products. The supply of some agricultural products will remain strained.'' Outlining the anti-inflation measures this year, the commission said the State Council would control the introduction of price reforms.

Price readjustments to help solve the problem of unreasonably low prices for grain, cotton and petroleum would remain the centre-piece of this year's reform programme.

The State Council would strictly supervise reform at all levels to ensure increases imposed were not excessive.

And the commission said regional authorities should introduce the reforms gradually and should fully consider how much the public could bear and whether the reform would undermine stability.

''The prices of daily necessities should not be arbitrarily raised,'' the commission said. ''[Local Governments] can provide some price subsidies whenever necessary.'' Local Government should not lower the amount of money allocated to subsidising prices of goods, it said.

Supervision and monitoring of price fluctuations would be strengthened through a series of measures including nationwide inspection and a price monitoring and forecast mechanism.