(CRI English)
Updated: 2007-09-13 14:52

The Consumer Price Index rose 6.5 percent year-on-year in August, the highest in more than a decade. However, experts believe this round of price hike is mainly driven by soaring food prices, so as long as food prices fall, the price level will become more stable.

Yao Jingyuan, chief economist of the State Statistics Bureau explains.

"When we talk about inflation, we mean persistent rise in the general price level, as measured against a standard level of purchasing power. But what we have now is not a general price rise, it's only structural rise. Therefore, we haven't entered a inflation period."

Wang Guogang, an expert with the Chinese Academy of Social Sciences, is among those who believe that food prices will go down.

"The 6.5 percent rise is mainly caused by the price hike in meat and poultry. Now, pork price is falling. It's short-term, so there's no need to be anxious."

In the wake of fluctuations in food prices, Zhang Liqun, a researcher of the State Council Development and Research Center says, a mechanism is needed to avoid price instability so that its impact on both consumers and suppliers can be minimized.

"If the price falls too much, it will harm the farmers. So a better mechanism is needed in the future to balance the supply and demand in pork and eggs. The price of meat and eggs will not fluctuate too much under such a mechanism. "