China to take measures to curb inflation

Inflationary pressure is likely to stay high for the year ahead. The rise in the CPI figure hit an 11 year high this January. We take a closer look at inflationary pressures over the years.

The consumer price index, surged by 7.1 percent year-on-year in January, an 11-year record rise. The growth in CPI hit 4.8 percent in 2007, the fastest pace in a decade. The CPI rise has been moderate over the past few years: 1.2 percent in 2003, 3.9 percent in 2004, 1.8 percent in 2005, and 1.5 percent in 2006.

To rein in inflation and cool down the economy, China raised its interest rate six times last year and ordered domestic lenders to set aside more cash as reserves on 10 occasions.

Factors driving prices up are come from both home and abroad. Upward pressure on prices will stay strong this year. With raw material prices climbing steadily, and a steep rise in real estate prices, the country is facing the arduous task of holding down inflation.

The government is vowing to take powerful measures to increase effective supply while curbing excessive demand. These measures included instituting contingency plans for market supply and price, putting on hold the price surge in production materials, especially those for agricultural production, and subsidizing residents in the lower income bracket.