Wen confident China can control inflation pressures

Chinese Premier Wen Jiabao said on Tuesday he was confident rising prices could be controlled this year, but ambitious inflation goals set for 2008 will not be changed despite pressures caused by severe winter storms.

Inflation in China is running at 8.7 percent, the highest pace in nearly 12 years.

Expectations of inflation can be more frightening than the actual rise in prices, Wen said in his annual news conference following the closing of the National People's Congress, or parliament.

"We have set a target of 4.8 percent CPI growth this year," said Wen.

"To be honest with you, it's not easy to achieve this goal, especially given that we suffered very rare snowstorms in the first two months of this year."

Wen said China's inflation target for this year has not changed because the government is determined to make controlling price rises and curbing inflation his government's top priority, reiterating a vow made by other officials.

The ambitious goal will also help to ease expectations that inflation will keep rising, he said.

"When prices rise fairly fast, inflationary expectations become more dangerous than price rises themselves," said Wen.

Wen said ample grain reserves of between 150 million and 200 million tonnes will help to keep prices in check.

"We are fully confident that we can control the situation of excessive price rises."

($=7.09 yuan)