Chinese consumer price index growth eases to 7.7 pct in May, but inflation remains threat.
China's inflation rate dipped to a still high 7.7 percent in May, thanks to easing food prices, though pressures for further price increases remain a threat and few saw reason to celebrate.
The rise in the consumer price index for May was lower than the 8.5 percent rise in April. Slower growth was widely anticipated thanks to state media reports suggesting the figure would be below 8 percent for the first time in four months.
But restaurant owner Ding Yuyi was unimpressed. "Yes, I know the May CPI fell below 8 percent, but sorry, I just don't feel it," Ding said, noting he is paying 50 percent more for rice than a year ago, and double last year's prices for many vegetables and other cooking staples. "I've had to give up cooking some dishes because my customers are very sensitive about prices and I can't make a profit," he said.
Investors dumped stocks on persistent worries over further credit tightening. The benchmark Shanghai Composite Index sank for a seventh straight session, falling 2.2 percent to 2,957.53, a 15-month low.
Food prices, a key component in the consumer price index, climbed 19.9 percent in May from a year earlier, down slightly from a 22.1 percent increase in April. Fresh vegetable prices, which have soared recently, fell 15.7 percent from a year ago, the National Bureau of Statistics said.
Nonfood prices rose 1.7 percent, compared with 1.8 percent in April, it said. Economists warn that surging prices for crude oil and other commodities pose a continued threat, even as food price increases have abated with the arrival of summer.
Inflation is a politically sensitive issue in a country where many families spend about half their incomes on food. Spells of high inflation in the 1980s and 1990s helped trigger protests, a scenario that Chinese leaders are keen to avoid as the country comes under intense foreign scrutiny ahead of this summer's Beijing Olympics.
"While agriculture seems now to be responding ... there are other price pressures out there that are being severely repressed," Stephen Green, China economist for Standard Chartered Bank in Shanghai, said in a report Thursday. "There is a lot more bottled up inflation in this economy than meets the eye," Green said.
Chinese retail gasoline and diesel fuel prices were hiked about 11 percent in November but have remained frozen since, despite surging crude oil prices. In January, food processors were ordered to get approval for any price hikes, and fertilizer prices have been frozen to protect farmers.
On Wednesday, authorities said China's producer price index for May -- an indicator of wholesale and raw material prices -- rose to 8.2 percent from April's 8.1 percent, boosted by double-digit increases in prices of oil, coal, steel and other industrial materials.
Signaling continued concern over inflation, the central bank recently raised the amount of deposits banks are required to keep in reserve by 1 percent, to a record high 17.5 percent. The move is aimed at curbing excess bank lending that is seen as contributing to price increases.
May's inflation rate was the lowest since a 7.1 percent increase reported in January and the first significant decline since prices began climbing more than a year ago. "Increased supply has continued to contribute to stabilizing farm product prices," Jing Ulrich, chairwoman of China equities for JP Morgan Chase & Co., said in a written commentary Thursday.
The decline might have been faster, she noted, if not for the disastrous earthquake that struck central China on May 12, devastating cities and towns across much of heavily populated Sichuan province and killing about 70,000 people.
China has raised interest rates and ordered other credit tightening measures to try to ease inflationary pressures without unduly compromising the strong economic growth needed to create jobs.
But unusually severe winter storms in January and February derailed those efforts, wrecking crops, killing livestock and paralyzing transport. Food prices soared amid meat and vegetable shortages in some areas. The government has raised subsidies to encourage farmers to raise more pigs. It also has imposed curbs on grain exports to increase supplies available on domestic markets.
China's inflation rate dipped to a still high 7.7 percent in May, thanks to easing food prices, though pressures for further price increases remain a threat and few saw reason to celebrate.
The rise in the consumer price index for May was lower than the 8.5 percent rise in April. Slower growth was widely anticipated thanks to state media reports suggesting the figure would be below 8 percent for the first time in four months.
But restaurant owner Ding Yuyi was unimpressed. "Yes, I know the May CPI fell below 8 percent, but sorry, I just don't feel it," Ding said, noting he is paying 50 percent more for rice than a year ago, and double last year's prices for many vegetables and other cooking staples. "I've had to give up cooking some dishes because my customers are very sensitive about prices and I can't make a profit," he said.
Investors dumped stocks on persistent worries over further credit tightening. The benchmark Shanghai Composite Index sank for a seventh straight session, falling 2.2 percent to 2,957.53, a 15-month low.
Food prices, a key component in the consumer price index, climbed 19.9 percent in May from a year earlier, down slightly from a 22.1 percent increase in April. Fresh vegetable prices, which have soared recently, fell 15.7 percent from a year ago, the National Bureau of Statistics said.
Nonfood prices rose 1.7 percent, compared with 1.8 percent in April, it said. Economists warn that surging prices for crude oil and other commodities pose a continued threat, even as food price increases have abated with the arrival of summer.
Inflation is a politically sensitive issue in a country where many families spend about half their incomes on food. Spells of high inflation in the 1980s and 1990s helped trigger protests, a scenario that Chinese leaders are keen to avoid as the country comes under intense foreign scrutiny ahead of this summer's Beijing Olympics.
"While agriculture seems now to be responding ... there are other price pressures out there that are being severely repressed," Stephen Green, China economist for Standard Chartered Bank in Shanghai, said in a report Thursday. "There is a lot more bottled up inflation in this economy than meets the eye," Green said.
Chinese retail gasoline and diesel fuel prices were hiked about 11 percent in November but have remained frozen since, despite surging crude oil prices. In January, food processors were ordered to get approval for any price hikes, and fertilizer prices have been frozen to protect farmers.
On Wednesday, authorities said China's producer price index for May -- an indicator of wholesale and raw material prices -- rose to 8.2 percent from April's 8.1 percent, boosted by double-digit increases in prices of oil, coal, steel and other industrial materials.
Signaling continued concern over inflation, the central bank recently raised the amount of deposits banks are required to keep in reserve by 1 percent, to a record high 17.5 percent. The move is aimed at curbing excess bank lending that is seen as contributing to price increases.
May's inflation rate was the lowest since a 7.1 percent increase reported in January and the first significant decline since prices began climbing more than a year ago. "Increased supply has continued to contribute to stabilizing farm product prices," Jing Ulrich, chairwoman of China equities for JP Morgan Chase & Co., said in a written commentary Thursday.
The decline might have been faster, she noted, if not for the disastrous earthquake that struck central China on May 12, devastating cities and towns across much of heavily populated Sichuan province and killing about 70,000 people.
China has raised interest rates and ordered other credit tightening measures to try to ease inflationary pressures without unduly compromising the strong economic growth needed to create jobs.
But unusually severe winter storms in January and February derailed those efforts, wrecking crops, killing livestock and paralyzing transport. Food prices soared amid meat and vegetable shortages in some areas. The government has raised subsidies to encourage farmers to raise more pigs. It also has imposed curbs on grain exports to increase supplies available on domestic markets.
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