Official: Inflation likely to rise
5 November 2007
High oil prices, which have already translated to a gasoline price hike in China, could cause production costs to rise and trigger high inflation levels, state media reported, citing official sources. Zhu Hongren, a deputy department director at the National Development and Reform Commission, warned that the current level of inflation, which has been labeled a temporary structural high due mainly to high food prices, might last longer than initially expected. China's consumer price index reached an 11-year high of 6.5% in August before slowing to 6.2% in September. Crude oil prices for December delivery recently rose to a record US$95.93 a barrel on the New York Mercantile Exchange. Zhu said that the government would tighten macro control policies, cut back liquidity, and restrain commercial bank loans in order to combat further inflation. Other economists are looking beyond oil as the cause of inflation, citing a "cycle of high prices" across the economy as a whole.