| China's CPI likely to climb but rise set to be under 4% |
SHANGHAI, Aug. 7 -- CHINA'S consumer price index is likely to rise but be kept under four percent this year as increases in food prices will be quickly curbed in the second half of the year, said Yao Jingyuan, chief economist at the National Bureau of Statistics.
Yao said the rise in food prices has only resulted from an "adjustment within the nation's economical structure."
"Despite the price rises of pork and a few other food products, the current overall supply far exceeds total demand and consumer prices are not likely to keep rising," he said.
A report from the Ministry of Commerce suggested that the price rise will slow in the second half.
"The fluctuation in food prices, caused by a rise in costs, seasonal factors, natural disasters and other factors, is quite common," said the report.
Li Xiaochao, a NBS spokesman, said that rising international grain prices and the jump in grain demand had driven up domestic grain costs, which, in turn, led to the recent food price increases.
Although rising prices for foodstuffs - including grain, meat, poultry and eggs - pushed China's CPI up to a 28-month high of 4.4 percent in June and 3.2 percent in the first half of this year, the country's core CPI, with foodstuff and energy prices deducted, gained only 0.9 percent in the first six months, Li said.
Chinese farmers will benefit from the rise in food prices as their income will increase with higher prices, said Lu Zhongyuan, director of the Macroeconomic Research Institute of the Development Research Center of the State Council.
However, Zuo Xiaolei, an analyst with Galaxy Securities, is concerned that the price hikes are only evident in the distribution of goods, instead of when grain and meat are procured from farmers, and that farmers would actually not benefit at all.
Zuo also said that the price mark-up in the process after production before it reaches the end user would definitely lead to inflation.
China's food price has surged 7.6 percent in the first half, while grain rose 6.4 percent and eggs jumped 27.9 percent. Prices of pork soared 70 percent over the same period last year, according to NBS figures.
Liang Hong, chief economist with Goldman Sachs (Asia) China, predicted that China's CPI would grow more than five percent in July.
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