Raw material price hikes not to drive up CPI (People's Daily Online) Updated: 2005-03-28 15:51
The recent price hike in raw materials, fuel and power will not push up the
prices of consumer goods in the near future, said an official with the State
economic planner Sunday.
Addressing a forum on corporate management, Cao Yushu, deputy secretary
general of the National Development and Reform Commission said that China is
confident of keeping its Consumer Price Index (CPI) growth within four percent
this year.
The country's Producer Price Index (PPI) jumped by 5.8 percent in January and
5.4 percent in February year-on-year, according to the National Bureau of
Statistics.
"My study on China's price transmission mechanism showed, " said Cao, "when
the country's total supply exceeds the total demand, it takes a long time for
PPI growth to exert influence on CPI.
"Therefore, although the steel, crude oil and ironstone witness rapid price
increases these days, China's CPI could maintain the steady growth, at least for
the whole year of 2005," he said.
During this period, many industrial companies will see a squeeze on their
profits, industry analysts said.
When supply falls short of demand, said Cao, PPI will start to show its
effect on consumer prices.
