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Transport problems set to spur further price rises
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Widespread snowstorms buffeting the country may further drive up consumer prices if disrupted travel on roads and rail is not restored soon, economists have said.

The disruption has caused a shortage of food and agricultural products, the Ministry of Commerce said on its website, while the Ministry of Agriculture said the wholesale price index of agricultural products surged to 174.8 points yesterday, up from 155 points on Jan 1.

"These developments will likely push up near-term CPI inflation," Liang Hong, an economist with Goldman Sachs in Hong Kong, said.

The consumer price index (CPI) rose 4.8 percent last year, the highest rise in more than a decade. Food, which accounts for a third of the CPI basket, was a main driver of the inflation. Recently, the government has introduced several measures, including a temporary price freeze on some products, to prevent the price hikes evolving into overall inflation.

"Prices will rise further if transportation is not restored quickly," Chen Jijun, an analyst with CITIC Securities, said.

The Ministry of Commerce said this week that local authorities can deploy food reserves to deal with intense market fluctuations.

Local suppliers have also been urged to increase production of cooking oil, meat, eggs and vegetables.

(China Daily January 29, 2008)

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