During the month of February the inflation rate of China went up to 8.7%. This is the highest inflation rate in China in the last 12 years. It is being speculated in certain sectors in China that the increase in the prices of food items in China would now be affecting other sectors of the Chinese economy.
The economists are of the opinion that these statistics cannot be relied upon, as they are irregular owing to the influence of several seasonal considerations. The fact that the lunar holidays of New Year in China mostly occur in the month of January or February makes the inflation figures almost impossible to be judged impartially.
Matters have been further complicated by the big winter storm that affected the supplies of electricity as well as transportation in the Central and Southern regions of China. However, the national government of China is deeply concerned with the proceedings and would be making maximum efforts to correct the situation.
As per the chairman of UBS, Jonathan Anderson, the inflation has mostly been centered on food items and the pattern stays the same. The prices of the goods and services have not accelerated. Only the prices of fresh vegetables and fresh meat increased in February contributing to the immense rate of inflation.
In order to stabilize the situation, the national government has fixed the prices of those goods that are controlled by it. Any extraordinary increase in the other sectors is supposed to be reported to the Chinese government by the relevant authorities.
While initiating the yearly session of the National People's Congress during the previous week the Chinese Prime Minister, Wen Jiabao, stressed on the fact that the Chinese government was right now focusing on fighting inflation.
As per Andy Rothman working in CLSA in Shanghai the prices of food items are likely to come down during the summer. The CPI is expected to touch the five per cent mark for the full year. That would be just more than what the government had expected.
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