Singapore (Platts)--10Dec2007
China's consumer price index, the main gauge of inflation and the
temperature of the economy, hit a new 10-year high of 6.9% in November, the
government said Tuesday.
The CPI figure indicated accelerating inflationary pressure, the official
Xinhua news agency said.
Yao Jingyuan, chief economist with the National Bureau of Statistics,
said price hikes for foodstuffs, which have a weight of 33% in China's CPI,
and oil price spikes were major driving forces behind the rise.
The CPI had risen 6.5% in October, matching August's figure, which the
government had then characterised as the highest level in more than a decade.
The National Bureau of Statistics, which published the figure, said the
spike in November was fuelled by an 18.2% rise in food prices.
The CPI monitors price changes in consumer products and services, about
half being food products and services subject to seasonal changes.
Meanwhile, surging crude prices drove up the country's November producer
price index -- a measure of the cost of raw materials such as steel and coal,
as well as machinery, electronic products, chemicals and textiles, which are
used for further production -- by 4.6% on year, Xinhua said.
The November PPI was the largest monthly increase in more than two years,
the National Bureau of Statistics said Monday. A 22.6% rise in November crude
oil prices compared with a moderate 4.2% in October were fingered as the main
driving force behind the jump in PPI, Xinhua said.
The latest PPI figure indicated accelerating price pressure, coming on
the heels of a 3.2% rise in October. The PPI had risen by less than 3% in each
of the previous eight months.
In August 2005, the PPI rose a record 5.3%.
"The major contributor was the sharp rise in crude oil prices," Xinhua
quoted Lin Songli, a Guosen Securities analyst, as saying.
China's domestic crude prices are roughly in line with global prices,
unlike government-controlled prices for refined products.
The refiner's prices of gasoline rose 3.9% in November, reversing a drop
of 5% in October, Xinhua said. Gasoil and kerosene prices recorded gains of
8.8% and 8%, respectively, up from 1.5% and 0.3% a month earlier.
The costs of raw materials, fuel and power, rose by 6.3% from a year
earlier, up from 4.5% in October.
Fan Jianping, an economist with the State Information Center, a
government think tank, said rising production costs would add to inflation
pressure in future months. This, however, could be relieved if the government
beefed up macro controls to cool the economy, he said.
Fan said most enterprises would choose to squeeze their profit margin to
write off production costs, especially in a competitive market.
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