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Inflation Fears Rise

by 5m Editor
9 August 2007, at 9:24am

HONG KONG - Mainland consumer prices will remain high in the second half as recent price increases are neither accidental nor temporary and inflation risks should be noted with concern, the People's Bank of China cautioned yesterday in its second-quarter monetary report.

Inflation acclerated to a 33-month high of 4.4 percent in June, pushing up the first-half figure to 3.2 percent - both exceeding Beijing's full-year target of 3 percent.

The government is due to release last month's consumer price index data on Monday. Most economists forecast consumer prices would rise above 5 percent on food costs.

Rising prices for pork and eggs have propelled food costs by 11.3 percent in June compared with a year ago.

The PBOC said inflation in the agricultural sector has spread to industries such as food processing, hospitality and even services. To make matters worse, a drought is fueling uncertainty over food supply in the fall, further increasing the pressure on prices.

"Judging by internal and external factors, current price hikes are not simply due to accidental factors and they are hard to solve in the short term," the central bank said.

Source: The Standard

5m Editor