Economy

Rising grain price will not prompt inflation

By Gao Qihui (chinadaily.com.cn)
Updated: 2010-07-06 14:51

The rising price of food and summer grain crops will not greatly influence the Consumer Price Index (CPI), Securities Daily reported.

The overall output of summer grain crops has reached 123 million tons in 2010, 350,000 tons less than last year, which has fuelled speculation the price will rise.

The expectation of a rise in the price of summer grain crops, the main component of food prices, leads to some anxiety over adding pressure to inflation. Although the purchasing price of the crops rises, it may not have an obvious influence on the CPI,?as the food, which includes crops, only accounts for 33 percent of all products which are taken into count by the index.

"A one percent rise of the grain price only contributes 0.3 percent to the CPI's rise," said Qiu Huanguang, an associate researcher at Center for Chinese Agriculture Policy, Chinese Academy of Sciences (CAS).

"The price rising does not necessarily mean inflation," said Wang Guogang, the director of Institute of Finance and Banking, Chinese Academy of Social Sciences (CASS). The price rise of one single category of products does not mean inflation, said Wang.