Chinese premier declares inflation victory

Discussion in 'Wall St. News' started by ASusilovic, Jun 24, 2011.


    Chinese premier Wen Jiabao has declared victory over domestic inflation, saying that the government has successfully reined in price pressures.

    “China has made capping price rises the priority of macro-economic regulation and introduced a host of targeted policies. These have worked,” Mr Wen writes in Friday’s Financial Times. “We are confident price rises will be firmly under control this year.”

    Consumer price inflation has been rising since the middle of last year, reaching a 34-month high of 5.5 per cent in May. Politically sensitive food prices have been the main driver of headline inflation, rising more than 10 per cent year-on-year in each of the past five months. Food inflation hit 11.7 per cent in May, feeding fears that persistent price rises could exacerbate social tensions.

    Most analysts predict that the headline inflation rate will peak soon, before starting to decline. According to a HSBC purchasing manager’s index, inflationary pressures have eased in the manufacturing sector.

    “The overall price level now is within a controllable range and is expected to drop steadily,” Mr Wen writes.