China might take tightening policy to handle inflation probl

Chinanews, Beijing, Aug 10 – Chinese government is afflicted by the possible inflation problem. On Wednesday, the central bank issued a report analyzing the implementation of China's monetary policies during the second quarter of this year. The report reminds governments at all levels to direct their attention to the current price hike and prevent an overall price rise. This is the first time for the central bank to issue a warning about the possible overall inflation. Some economists predict that the central government might take a series of tightening policies during the latter half of the year to control macro economy.   The current price hike was initiated by the price rise in foods and it seems the price rise has now spread to other goods as well. The report says that during the first half of the year, CPI growth rate reached 3.2%.   “The price rise in foods and eggs has now begun to affect the downstream industries, such as catering and food processing,” the report points out.   The central bank's report contradicts the earlier claim by the spokesperson at the National Statistics Bureau, who said that CPI growth was a structural problem and if appropriate measures were taken, it would not cause an overall price rise.   According to the central bank, the current price hike is not accidental or temporary occurrence. Rather, it is caused by various factors working together. The rising production costs, the growing demand and some structural problems all contribute to the problem. The price rise in foods, meat and eggs may last for a certain period of time in future. At the same time, there are possibilities for the price of energy resources to go up, labor costs to rise and inflation to expect further strengthening, the report says.   Next Monday, China will publicize the CPI figures for July. The figures will become an important basis for the central government to decide what measures to take in the next stage. Despite the fact that CPI figures of June hit 4.4%, a historical high in past 33 months, such figures might continue to rise in July to even exceed 5%. According to Wang Qing, chief economist at Morgan Stanley's China region, CPI figures in July might even touch 5.5%.