China's interim price intervention announced in mid-January is necessary and in accord with the law, said Ma Kai, the top macro-economic planner, on Thursday.

"As a responsible government, we will not turn a blind eye to the situation," said the minister in charge of the National Development and Reform Commission, referring to the price hikes since mid 2007 which was worsened by the snow havoc before the Spring Festival.

The government is authorized by the Price Law to take such interim measures in certain circumstances, he said. The measures were not equal to a price freeze and they would be lifted when prices become stable.

"So, do not misread our interim measures as signs that the government steps up the administrative interfering on market prices," he said.

Last year, China's consumer price index (CPI) rose 4.8 percent year-on-year, the highest since 1997 and well above the 3 percent target, mainly due to rises in the cost of food and housing.

Climbing food prices contributed to 83 percent of last year's CPI rise and 84.5 percent of that in January, Ma said, adding the price hikes were more "price recoveries", given the slight fluctuations of the past decade.

"This, however, does not mean we can ignore the situation," he said. "In fact, we have to be aware of the increasing pressure."

Premier Wen Jiabao, in his government work report to the parliamentary session beginning Wednesday, acknowledged China is facing increasing inflationary pressure.

China has set the CPI rise target for this year at around 4.8 percent, according to Wen's report.

To curb domestic price hikes, Wen announced a series of measures, including expanding production of grain, meat and other consumer goods, restricting industrial use of grain and grain exports, increasing import of consumer goods in short supply and aiding the low-income population.

(Xinhua News Agency March 6, 2008)