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China's Nov CPI hits 5.1%, a 28-month high

Source:   Time:

Citizens look at price tags in a supermarket in Hangzhou, capital of east China's Zhejiang Province, Dec. 11, 2010. China's consumer price index (CPI), a major gauge of inflation, rose to a 28-month high of 5.1 percent in November, the National Bureau of Statistics (NBS) said Saturday. (Photo Source:Xinhua)

BEIJING, Dec. 11 (Xinhua) -- China's consumer price index (CPI), a major gauge of inflation, rose to a 28-month high of 5.1 percent in November, the National Bureau of Statistics (NBS) said Saturday.

The growth rate picked up from 4.4 percent in October, according to the NBS. An 11.7 percent surge in food prices drove the CPI higher. Food prices have a one-third weighting in the calculation of China's CPI.

The year-on-year increase in food prices grew from rises of 10.1 percent in October, 8 percent in September and 7.5 percent in August.

"November's price rises are beyond people's expectations," NBS spokesman Sheng Laiyun said, citing rises in food prices and housing utility costs as the main drivers of the inflation increase.

Food price rises contributed 74 percent to the November CPI figure, he said.

Measures taken by the central government to control prices need time to take effect, he added.

"Prices will be stable as long as ministries and regional authorities earnestly implement the central government's measures," he said.

The data also showed that China's CPI rose 3.2 percent year on year in the first 11 months, surpassing the government's target ceiling of 3 percent for the year.

Citizens select goods in a supermarket in Hangzhou, capital of east China's Zhejiang Province, Dec. 11, 2010. China's consumer price index (CPI), a major gauge of inflation, rose to a 28-month high of 5.1 percent in November, the National Bureau of Statistics (NBS) said Saturday. (Photo Source:Xinhua)

The producer price index (PPI) for China's industrial products rose 6.1 percent year on year in November, compared with a 5.0 percent gain in October.

Rising prices have prompted the government to take measures to rein in rising prices. The measures include boosting supply of essential goods, giving financial aid to the needy, and mopping up excessive liquidity. Economists have blamed excess liquidity for helping to push up prices.

The central bank on Friday ordered banks to hold more funds in reserve. It was the sixth such order this year. The central bank announced in October its first interest rate hike in nearly three years.

The move came after the central bank earlier Friday said that new yuan loans in November totaled 564 billion yuan (84.7 billion U.S. dollars), a figure that took total new loans in the first 11 months of the year to 7.45 trillion yuan - just shy of the government's 7.5-trillion-yuan full-year target.

In another step to cool prices, the State Council, China's cabinet, on Friday increased on penalties on Chinese vendors who collude to fix prices. Price fixers will face fines of up to 5 million yuan under the new penalties, up from the previous 1 million yuan.

Liu Yuanchun, a professor at Beijing's Renmin University, said the administrative restrictions cannot slow inflation anytime soon, with the increase in the PPI showing that inflation has spread.

Given the quickening inflation, Liu added that an interest rate hike will definitely be on the government's agenda.

People buy vegetables at a market in Hefei, capital of east China's Anhui Province, Dec. 11, 2010. China's consumer price index (CPI), a major gauge of inflation, rose to a 28-month high of 5.1 percent in November, the National Bureau of Statistics (NBS) said Saturday. (Photo Source:Xinhua)

He said November CPI may be the peak for the year and that inflation over 2011 will be 4 percent.

Zhang Xiaojing, an expert at the Chinese Academy of Social Sciences, a government think tank, said the full-year 2010 CPI will definitely exceed the government's target ceiling but be below 3.5 percent.

"China faces great inflation pressures in the mid- and long-term. I suggest hiking rates," Zhang said.

China said on Dec. 3 it will next year switch its monetary policy stance from "relatively loose" to "prudent" to tackle inflation while keeping economic growth sustainable.

Figures in November  

CPI

PPI

Industrial value added output  Retail sales of consumer goods Urban fixed asset investment Imports  Exports   New lending
Up 5.1%  Up 6.1%  Up 13.3%  Up 18.7% Up 24.9%  Up 37.7%  Up 34.9% Drops to 564 billion yuan

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