CPI Still High at 8.5% in April   

By Lihua Wang   
According to the National Bureau of Statistics (NBS), the CPI in April surged 8.5% year-on-year. The food prices this April increased 22.1% year-on-year while non-food prices rose 1.8% year-on-year. NBS says the CPI rise is due to last April's relatively small base and the international grain prices hikes. "China will closely monitor the trends of the future global prices and focus on the limitation on domestic prices rise and inflation."
    "It is difficult for China to realize the government's inflation target of 4.8% this year," an economist expressed.
    The government is making efforts to anchor the inflation including raising the interest rate, and the deposits reserve requirement ratio to 16.5% announced on May 12th, the highest in twenty-three years.
    The CPI growth for the first four months of 2008 stood at 8.2%, mainly driven by the surging prices of foods.
    In addition, NBS announced China's PPI (producer price index) on May 12th. The growth of PPI climbed to 8.1%, hitting the four years high. The PPI hikes are required by the rising prices of raw materials and fuels, according to an executive of chemical producer.
    Economists expect PPI will continue to rise in the next months, with lower growth from the first half of 2008.
   The PPI is considered a leading indicator for CPI. Analysts say it usually takes about six months for producers to pass their cost pressures on to consumers. "The PPI rise will aggravate inflation in the future months." If that continues, maintaining CPI growth to within 4.8% this year is hardly possible."