Economy

Inflation in food prices slows

By Chen Jia (China Daily)
Updated: 2011-02-15 10:45

BEIJING - A rise in the price of most food items included in a government-monitored list slowed between Feb 1 and 10, according to data released by the National Bureau of Statistics on Monday.

The average rise in the prices of 29 food items in 50 major cities during the first 10 days of February is close to 2.6 percent, down from the 4.6 percent seen in the last 10 days of January, the data showed.

From the list, the price of bananas increased the most, by 10.1 percent. Meanwhile, the price of vegetables surged by 5.2 percent on average, compared with the 14.1 percent increase in the previous month. Prices of four food items, including rapeseed oil and peanut oil, decreased slightly.

Moves by the Chinese government to control inflation helped to lower prices to some extent, and this could result in a drop in the consumer price index (CPI) for the month of February, said analysts and officials.

After the shopping spree for the Chinese lunar new year holidays, food prices could ease and see February CPI come in at less than 5 percent, said Wang Tao, chief economist of the UBS Securities Co Ltd.

"January CPI, which will be announced on Tuesday, is likely to be 5.4 percent, and will be more than 5 percent on average for the first half of this year," said Wang.

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However, the temporary relief in food prices is unlikely to ease inflationary pressures in the country.

The colder-than-usual winter weather in many parts of China has already begun to affect food prices, according to a report from JP Morgan Securities (Asia Pacific) Limited.

Moreover, a recent drought in the grain-producing northeastern part of the country may reduce grain harvests this year and inflate prices, said the report.

The index of prices for a basket of major consumer food items rose 7.3 percent in January, according to data from the Ministry of Agriculture.

Lian Ping, chief economist of the Bank of Communications, predicted that food prices in January may be between 2.2 and 2.7 percentage points higher than in December 2010, and that non-food prices may increase by 2.2 percent. "The inflation for January will rise from December to no less than 5 percent," he said.

Excessive liquidity, boosted by the monetary easing policies of some major world economies, including the United States, will still contribute to China's soaring inflation, said Lian. Additionally, the increasing price of international commodities will also increase prices in China, he said.

September-delivery wheat on the Zhengzhou Commodity Exchange jumped 3.7 percent to a record 3,110 yuan ($471) a metric ton on Monday, according to Bloomberg News.