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China's Inflation Pressures Ease, but Target Still Elusive

The slowing growth of China's main inflation indicator is set to continue in the April figures, thanks to falling farm produce prices, market analysts said on Sunday.

The consumer price index (CPI), which hit 8.7 percent for February and 8.3 percent for March, would probably be around 8 percent for April over the same month last year, said Chen Jijun, an analyst with Citic Securities.

Falling farm produce prices were the main factor dragging down the rise in the CPI, said Chen.

Although, grain prices remained stable but high, vegetable prices dropped significantly last month thanks to abundant supply, with some categories falling by 50 percent.

Zhang Ying, chief analyst with Hujie Investment, forecast the growth in the index would continue to slow after the 11-year peak in February.

The annual goal of 4.8 percent, however, remained a difficult target to hit, said chief economist with the National Bureau of Statistics (NBS) Yao Jingyuan, in an interview with the China Central Television on Wednesday.

The CPI surged 8 percent in the first quarter, 5.3 percentage points higher than the same period last year, indicating continuing inflationary pressures, he said.

Food prices, the key driving force of the CPI, remained high with pork prices rising 63 percent year on year, said Yao.

Up to six million pigs died in the severe winter weather this year, driving up prices, he said.

External factors confounded the problem. International crude prices more than doubled in less than five months, greatly affecting domestic energy price controls, Yao said.

As world economies continued to integrate, global grain price rises also affected the domestic market.

The price of wheat had climbed by 112 percent and corn by 47.3 percent since September 2006, reaching a 10-year high. Rice prices also doubled to stand at US$760 per ton.

Yao said sufficient grain reserves and good production would guarantee supplies, barring any natural disasters.

The 4.8 percent annual target manifested the central government's resolution to contain inflation. "We have not only determination, but also concrete measures," Yao said.

(Xinhua News Agency May 4, 2008)

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