Agency allays inflation fears
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In a bid to reassure the public that inflation will remain in check, China's top economic planning agency yesterday said the nation has the capacity to keep consumer prices basically stable.
A rapid hike in the prices for daily necessities, in particular agricultural products, since July has ignited inflationary concerns, prompting the central government to announce a slew of measures to curb inflation.
"Such concern is understandable," the National Development and Reform Commission said. "But we have the confidence to say that at present our country has the capacity and conditions to keep the overall price level basically stable."
China's Consumer Price Index, a barometer of inflation, climbed 4.4 percent in October from a year earlier, the quickest in 25 months. Food price inflation hit 10.1 percent.
The State Council promised last week to ensure adequate supplies of coal, power and oil and said price control on daily necessities would be imposed, if required.
UBS analysts said the government won't repeat the broad price control in the short term as it did in 2007-08, following a spike in prices then. The price increase for most food products hasn't reached a level that needs direct state intervention and the regulation of fuel prices in 2007-08 in fact didn't have a positive effect. UBS said that if China does move to control prices, fuel products, grain and fertilizers will likely be targeted.
The NDRC said China has ample grain stocks despite being hit by several severe natural disasters this year. Supplies of farm products and daily necessities are sufficient, and production capacity for manufactured goods also far exceeds domestic demand.
The NDRC remarks came after the country's central bank last Friday announced the second increase in reserve requirement ratio for commercial banks in as many weeks to curb lending and contain inflation.
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