The government is trying to apply the brakes to its surging economy in a number of ways, but prices rise 4.4 percent in May.
By Associated Press
Published June 12, 2004
SHANGHAI, China - China's consumer prices rose 4.4 percent in May from a year earlier, the fastest increase in seven years, despite a wide range of measures taken to combat inflation, the government reported Friday.
The jump in the consumer price index, China's main barometer of inflation, was the 18th straight monthly advance, the statistics bureau said. The index rose 3.8 percent in April from a year earlier, and by 2.8 percent in each of the first three months of the year.
Meanwhile, state-run television reported Friday that investment growth in construction, factory equipment and other fixed assets slowed to 18.3 percent in May versus a year earlier, well below the 34.7 percent increase reported in April.
The fixed assets investment total for May has not yet been reported by the National Bureau of Statistics. But the reported slowdown would indicate that efforts to curb lending and shrink public spending on big projects may be having an effect.
The May price surge was caused largely by a jump in food prices. Grain prices soared 32.3 percent, edible oil prices were up 24.6 percent, and prices for fresh fruits, meat products and eggs all rose by about 20 percent.
Prices for many industrial goods fell slightly, while prices paid for housing and utilities were higher.
Officials worry that surging economic growth could set off even faster price rises, which in turn could trigger financial problems and social unrest. But May's increase was expected, since declines in demand for key commodities are likely to lag behind any slowdown in investment.
Authorities have tried to shrink bank lending and are discouraging new investment in industries such as steel, where overcapacity is feared.
Nonetheless, central bank officials have said they would consider more severe measures to cool the economy, such as an interest rate hike, if inflation hits 5 percent.
Consumer prices rose 1.2 percent in 2003. The government says it intends to keep the full-year increase for 2004 within 3 percent.
China's economy grew 9.7 percent in the first quarter versus a year ago and is expected to expand by 9.8 percent for the first half - well above the government target of 7 percent for all of 2004.
Reflecting strong consumer confidence in the economy, China's retail sales rose 17.8 percent in May from a year earlier to $50.4 billion, the statistics bureau reported.
In April, retail sales rose 13.2 percent over a year earlier.
Meanwhile, China's trade balance shifted into a surplus in May for the first time this year, the official Xinhua News Agency reported, citing customs figures.
Exports rose 32.8 percent in May to $44.87-billion from a year ago, while imports climbed 35.4 percent to $42.77-billion, leaving a trade surplus of $2.1-billion, it said.
Import growth slowed sharply in May, down 7.5 percentage points compared with the previous month.
