China: Prices rise 7.1 percent in January

20 February 2008

Beijing, China, 20 Feb – China’s prices rose 7.1 percent in January year on year, which was the highest level of the last 11 years, the National Bureau of Statistics (NBS) said in Beijing Tuesday.

The NBS noted that the prices of food had risen 18.2 percent in January, with the price of rice rising 5.7 percent and that of cooking oil rose 37.1 percent.

The price of pork, which is at the basis of the rise in the Consumer Price Index (CPI) in the second half of 2007, rose 58.8 percent in January.

Chief economist of the NBS, Yao Jingyuan said that the usual rises in prices before the Chinese New Year, the snowstorms that hit China in mid January and the relatively low rise in prices in January 2007, were the three main reasons for the rise seen in January of this year.

However, Song Guoqing, professor at the Economic Research Center at Beijing University told Chinese news agency Xinhua that the main reason for the CPI rise in January was the excessive growth of the money in circulation.

He added that, in his opinion, the measures adopted by the central bank of raising interest rates and obligatory reserves, were not sufficient to reduce the rise in prices.

According to the Chinese central bank, the cash in circulation in China totaled 41.78 trillion yuan (around US$5.81 trillion) at the end of January, which was a year on year rise of 18.94 percent, which indicates an excess of liquidity in the Chinese economy. (macauhub)