The Chinese authorities will strengthen mechanisms to control prices for basic food products amid a sharp acceleration in manufacturing inflation, which peaked in May in 13 years.
The State Committee for Development and Reforms of the PRC (formerly Gosplan) made such a decision at a meeting on Wednesday, June 9, reports ArgiCensus.
Stabilization measures, including an increase in government stocks and tighter control over supplies and prices, will include pork, corn, wheat, vegetable oils and vegetables.
China’s main planning authority stressed the need to respond to “abnormal price fluctuations,” Xinhua quoted the committee as saying.
In coordination with the government, the agency will introduce mechanisms for forecasting, monitoring and overseeing prices to prevent surges in the market for goods on which people’s daily lives depend, the statement said.
At the end of May, consumer inflation in China amounted to only 1.3% – by 0.4 percentage points. higher than in April, but four times lower than, for example, in the United States, where the rate of price growth reached a 13-year maximum (5%).
Nevertheless, producer price inflation – 9% yoy – was higher than forecasted and at its peak since 2008 in the PRC, and the gap between industrial inflation and consumer inflation has become a record one since 1993.
Chinese industry is hit by rising prices for basic raw materials, and the authorities are considering the possibility of restrictions on this market. In particular, according to Bloomberg, Beijing has conceived to cap the cost of coal ahead of the peak summer electricity demand.
Different options are being considered, the agency’s sources say: one is to set a ceiling selling price for mining companies, and the other is to impose a 900 yuan per tonne cap on the base price in the Qinhuangdao port.