Cao Zhen

    IF the inflationary pressure by the rising retail prices of mung beans, garlic and ginger in recent months was noticed, soaring prices of cooking oil, sugar, apples and vegetables turned an intense focus on inflation because it influences everyone’s daily life.

    In September, vegetable prices in major Chinese cities rose by 18 percent over the same period last year; eggs, pork and poultry, up 5.4 percent and grain, corn and wheat up 12.1 percent.

    Some of the sharp rises in food prices were attributed to extreme weather in some parts of the country as well as freight costs. A growing number of analysts say inflationary pressure would be felt in a longer term because of increases in labor costs.

    “Everything costs more right now, especially food, not to mention clothes and shoes,” said a consumer in Shenzhen.

    To face the challenge of high living costs, many consumers are beginning to buy daily commodities in case retail prices continue increasing until the New Year and Spring Festival. Financial advisers have suggested people invest in funds and stocks to save money.

    “The biggest problem with the consumer price index (CPI) and particularly the food inflation index is that the market basket was determined in 1993 and has not adjusted much since then,” said Yi Xianrong, a researcher at the China Academy of Social Sciences in Beijing.

    “In the process of the country’s industrialization and urbanization, China’s labor and capital quickly flow to cities, which means a decrease in labor for farming and agricultural products,” said Zhou Wangjun, vice director of the National Development and Reform Commission’s (NDRC) pricing department.

    In September, China’s CPI, the broadest measure of inflation, rose 3.6 percent year on year, hitting a two-year high. As the price index was heavily weighted toward food, which accounted for 64 percent of the total CPI last month, and as the prices of agricultural products rose, analysts predicted that the growth rate of China’s CPI for the full year would be above the 3 percent target set by the government.

    At a Chinese economics’ seminar at Beijing University at the weekend, analysts from 24 institutions, including Merrill Lynch, the Industrial Bank, CITIC Securities and Beijing University, also predicted that the nation’s CPI growth rate for October would edge up to 4 percent.

    Although Yao Jingyuan, chief economist at the National Bureau of Statistics, said China’s CPI would gradually decline after December because of the carryover effect, NDRC’s Zhou said the prices of agricultural products would not stabilize until farmers earned as much from agricultural production as they could working in cities.