BEIJING -- The price of corporate goods hit a record high for the year in
July, testifying to growing inflationary pressures in China.
The People's Bank of China has warned of the risk of inflation in its
quarterly report on monetary policy.
According to data released by the central bank on Monday, China's corporate
goods price indices (CGPI) were up 2.5 percent on last July, setting a new high
for the year.
This followed a year-on-year rise of 2.3 percent in June, which also broke
previous records.
The CGPI reflects price changes of products traded by corporations, and
traces overall price fluctuations together with the consumer price index (CPI).
The rise coincided with a record growth of producer prices indices (PPI) in
July, which rose 3.6 percent on the same period last year.
The central bank attributed the price hikes to the rapid growth of
investments and exports, which have maintained a buoyant demand for production
resources.
Cost rises due to stricter requirements for environmental protection, labor
insurance and work safety will also push up prices, according to the central
bank's analysis.
Both the CGPI and the PPI have hit record highs this year, signaling
inflationary pressure, said analysts.
However, CPI growth slowed in July. It was 1.0 percent up on July 2005 but
0.5 percentage points lower than June, ending the upward trend that has
prevailed since March.
Slower CPI growth was mainly caused by an easing in food prices in July, said
Li Huiyong, a macro-economist with Shenyin & Wanguo Securities Co. Ltd.
Statistics from the National Bureau of Statistics show that food prices in
July rose 0.6 percent on the same month of last year, 1.5 percent down on the
previous month.
A delayed knock-on effect in translating raw materials, fuel and power price
rises into consumer goods prices is another factor restraining the CPI, said
analysts.
