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 Communist leaders have declared taming soaring living costs their
priority this year and have been frustrated as inflation climbed
steadily, hitting a 34-month high of 5.5 percent in May. Inflation
is especially dangerous for the ruling party because it erodes
economic gains on which the communists base their claim to power. "The estimate is that the overall price increase in June will be
higher than May," said a statement by the National Development and
Reform Commission, the Cabinet's economic planning agency. It gave
no specific June target.
In the second half of the year, "new price increases should decline
and prices for the full year can be controlled," the statement said.
The agency said floods in eastern and southern China that damaged
crops were partly to blame. The May price rises were driven by an
11.7 percent jump in food costs. Earlier reports by state media cited farmers who said vegetable
output in some areas was down 20 percent. The official Xinhua News
Agency said prices of green vegetables were up 40 percent in some
areas. Private sector analysts blame China's inflation on the dual factors
of demand fueled by higher incomes that is outstripping food
supplies and the effects of a bank lending boom that helped the
country ward off the 2008 global crisis.
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Beijing is trying to cool an overheated economy that grew at a
sizzling 9.7 percent rate in the first quarter of the year.
The government has raised interest rates four times since October
and has told banks to increase their reserves to limit lending.
___ Online:
National Development and Reform Commission (in Chinese):
http://www.ndrc.gov.cn/
[Associated
Press]
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