Local governments must work to keep prices of consumer goods and services basically stable, according to a circular issued by the National Development and Reform Commission (NDRC).

"If the year-on-year consumer price index growth for an area hits four percent and lasts for three consecutive months, the local government should not raise any prices in the following three months, including parking tickets, water and so on," said an official with the NDRC.

The rule will also apply when the month-on-month CPI growth surpasses one percent.

"Unhealthy factors are still bothering China's economy, including the pinched power supply and inadequate transportation," said the official. "Price hikes of raw materials have started to have an effect on the prices of consumer goods."

NDRC Deputy Secretary General Cao Yushu said at a forum last week that the agency will not raise electricity and gasoline prices if nationwide CPI growth hits four percent.

China set the goal at the beginning of this year to keep CPI growth within four percent. The CPI in the first two months of 2005 rose 2.9 percent year-on-year.

The NDRC also currently requires local governments to keep track of price fluctuations of important consumer goods, including grain, chemical fertilizer, oil products, coal, steel and housing.

(Xinhua News Agency April 5, 2005)