China targets 4% consumer price rise in 2012

BEIJING - China aims to rein this year's consumer price growth at around 4 percent, according to a government work report delivered by Premier Wen Jiabao at the annual parliamentary session on Monday.

"In projecting a CPI increase of around 4 percent, we have taken into account imported inflation, rising costs of factors of production, and people's ability to absorb the impact of price increases, while leaving room for the effect of price reforms," Wen said.

Keeping overall prices basically stable is "a key task affecting the people's interests and China's overall economic and social development," according to the report.

"We will control prices and prevent inflation from rebounding by effectively carrying out macroeconomic policies, managing the supply of money and credit, and striving for basic equilibrium in aggregate supply and demand," said the report.

The country's consumer price index (CPI), a main gauge of inflation, rose 5.4 percent year-on-year in 2011, exceeding the government's full-year target of 4 percent set at the beginning of 2011 as food prices jumped 11.8 percent and farm produce prices surged 16.5 percent.

To contain runaway inflation, China's central bank had raised banks' reserve requirement ratio 12 times to a record high of 21.5 percent between 2010 and December 2011, when inflation rate eased to 4.1 percent.

The central bank also hiked interest rates five times since October 2010.

In January, the country's consumer prices saw a 4.5 percent year-on-year growth, down from a 37-month high of 6.5 percent in July last year.

The report pledged that the government would continue to implement a proactive fiscal policy and a prudent monetary policy this year.

The government targets a 14 percent growth in broad money supply, or M2, according to the report.

Elaborating plans to keep prices under control, Wen vowed to increase production and ensure supply of farm produces, improve distribution and reduce distribution costs, and tighten oversight and ensure market order.