Driven by the snowstorms and surging demand during the Chinese Lunar New Year holiday, rising food prices may have pushed China's January consumer price index (CPI) growth to another monthly high, said the China Securities Journal quoting analysts on Wednesday.

Zu Jianfang, a macro-economy analyst with CITIC Securities, said that given the foregoing factors and a relatively low figure last January, the year-on-year growth of CPI may reach 7.4 percent in January. The CPI growth may be 7.1 percent for the first quarter and five percent for the whole year.

Meanwhile, investment bank Goldman Sachs drew a similar conclusion. Rising food prices in snow-hit areas and demand during the holiday may have driven the CPI growth to 7.1 percent in January, it said in a report, adding that the figure for the first quarter will remain above seven percent.

Although the monthly consumer price index figures are scheduled to come out early next week, a series of statistics from the National Development and Reform Commission (NDRC) may, to some extent, support the above forecast.

Rising food prices

According to a recent NDRC survey covering 36 major Chinese cities, prices of meat, eggs, edible oil, and vegetable went up in January over the previous month. While service prices remained stable.

Specifically, wheat and flour prices in these cities remained stable; while meat and egg prices rose widely. Retail prices of pork, deboned beef, mutton, chicken, and eggs grew by 4.53 percent, 9.51 percent, 4.36 percent, 1.81 percent and 0.28 percent respectively over last December.

Meanwhile, retail prices of bean oil, rap oil and bottled peanut oil grew 9.14 percent, 8.63 percent and 4.81 percent respectively. Average prices of 15 kinds of major vegetables reached 4.04 yuan per kilogram (kg), up 5.21 percent over last December.

In contrast, among 37 major service items surveyed, prices of 32 items remain stable. Average price of liquefied natural gas fell 1.89 percent to 6.76 yuan per kg.

PPI growth to shrink

According to NDRC data, average coal prices at major mines were 480 yuan per ton, up 5.93 percent over last December. Steel product and nonferrous metal prices went up in general, while major chemical product prices remained flat.

However, the lagged effects of falling oil prices on the international market may drag down January's producer price index (PPI) growth a bit, said Li Huiyong, a macro-economic analyst with Shenyin Wanguo Securities.

Either way, since prices of the foregoing industrial products do not fell substantially, January PPI growth is not likely to go below five percent from 5.4 percent from last December, Li added.

(Chinadaily.com.cn February 14, 2008)