Chinese Inflation Unlikely To Meet Target, Says Bank

The Chinese consumer price index is said to be likely to outstrip the government’s target over the course of this year, according to an announcement made at a press conference today.

The announcement from Su Ning of the Chinese Central Bank described that it was looking likely that the Chinese CPI would grow by more than the 3.0% target set by Chinese authorities.

The consumer price index (CPI) is used as an indicator of inflation, and is seen as the principal figure in measuring and making decisions on price growth within an economy.

At a Bank of China press conference today, the statement was made to the effect that unforeseen global circumstances will make it probable that Chinese inflation will raise beyond the 3.0% target by the end of the year 2007.

Estimates show that a dramatic growth in food prices have accounted for up to 80% of inflation on the consumer price index. Further, with dwindling stocks of wheat and a terrible harvest, prices for wheat, wheat based products and meat are almost guaranteed to skyrocket over the coming months.

In fact, according to a report by The National Bureau of Statistics, the CPI actually rose by 5.6% over the course of July as a direct derivative of the increase in food prices.

Whilst the Chinese authorities have introduced a number of measures to calm their economy and put a stop to inflation over the last twelve months, external factors look set to plague the economy in the coming months.

With fuel prices continuing to be a problem for manufacturers, the ongoing sub-prime lending market crisis in the US, and the dramatic wheat shortage likely to send prices soaring on the supermarket shelves, it would seem that any further internal action would be ineffectual in calming inflation at this time.

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