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Prices forecast to keep increasing, but rate to slow
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Prices of consumer goods will continue to rise but at a slower rate, a top official said yesterday.


"The growth momentum of overall prices will gradually ease," Zhu Xiaoliang, deputy head of the Ministry of Commerce's department of market operation regulation, said during an interview broadcast live online.


He vowed the ministry will ensure adequate supplies of major food products such as meat and vegetables, to stabilize prices during the upcoming Spring Festival holidays.


The ministry is analyzing the price trends of about 600 consumer goods in the first half of the year. Preliminary results show most of them are in oversupply or at balanced supply-demand levels, Zhu said.


However, the rising costs of labor, land and raw materials will increase pressure on overall price levels in the first half of the year, he said.


China has been battling fast-rising prices for the past year, with the consumer price index (CPI), a bellwether of inflation, at 6.9 percent in November, an 11-year high.


It was the fourth consecutive month the index exceeded 6 percent.


Analysts expect CPI figures for December, due for release tomorrow, to be about 6 percent.


"The ministry's view is in line with market trends," Zhu Baoliang, a senior economist with the State Information Center (SIC), said.


Hikes in food prices, which account for a third of the CPI basket, are seen as the main contributor to the exceptional CPI growth, he said.


"The cost of services such as electricity and property rents also drive the index," he said.


Food prices have remained high in recent months but they will not continue to rise at such a fast rate, he said.


"This will help stabilize overall prices."


Zhu from the Ministry of Commerce said the price of pork will continue to rise as the cost of pig breeding remains high. Prices of vegetables and flour have also been rising recently because unfavorable weather conditions have hindered their transportation and reduced the supply.


The price of cooking oil will continue to go up because of the high cost of soybean and rising prices on the international market, he said.


"In the coming months, domestic cooking oil prices will run at high levels, but supply will be sufficient to meet demand," Zhu said.


Last week, the central government launched a number of temporary interventionist measures to control prices of several staples such as grain and meat.


(China Daily January 23, 2008)


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