NDRC: China Takes Measures to Stabilize CPI Growth Rate

In the first seven months of the year, China's consumer price index, a major inflation measure, rose 3.5% year-on-year.

Economic officials also note the 5.6% increase recorded in July, marking its highest single-month record in 10 years.

China's top economic planner attributes the hike to foodstuff prices soaring, indicating that China has taken measures to stabilize its fluctuations.

Though the risk of overheating is present, officials say it's being limited in certain sectors, and therefore there is no serious inflation in the domestic economy.

Bi Jingquan, Vice Chairman of the National Development and Reform Commission, says the hike in foodstuff prices changes in step with an increase in the international food market, and that Chinese consumers' demand for meat is merely keeping pace with the advanced living standards.

"From January to July this year, the average increase of CPI was 3.5% compared with the same period last year, among which 2.9% was driven by the price hike in food."

The Central Bank revealed last week that, since month-by-month increases are currently at 5.6 percent, although the government has taken more measures in this regard, the CPI this year will likely exceed the target growth rate of 3 percent.

The NDRC describes the central government as having attached high importance to the non-staple foods price hike. At the end of last month, China launched a special task to curb rising food costs, which includes providing subsidies for farmers and improving pensions and allowances for the retired and low-income households. As a result of that, during the last three weeks, the average wholesale meet price has seen a week-on-week drop.

Given the pressure by the upcoming Golden Week holiday on consumer demands, the official indicates that the price may fluctuate in the coming months, but in the long run, it will remain stable.

In response to suspicions that China is on the verge of imminent inflation, Bi Jingquan rules out the possibility of rampant inflation, saying though China has some structural imbalances, the government is keeping a sober mind to put inflation under control.

"We can judge from our current economic performance that the overall demand and supply is in balance. We are only suffering from some structural shortages of supply. Only when the overall demand greatly outnumbers the supply can we say there are serious problems of inflation."

But he also warns that there is the possibility and risk of economic overheating due to the high growth rate of the economy, and stresses that China should implement all measures to reinforce macro-economic controls to cool down the economy.