Tue, October 16, 2012
Business > Economy

Fall in food prices moderates CPI growth

2012-10-16 01:41:32 GMT2012-10-16 09:41:32(Beijing Time)  Xinhua English

Increase in food prices have come down quite a bit, 2.5 percent in September, down from 3.4 percent in August. So what exactly is cheaper now and what helped to lower food prices?

Guo Mingqian is an expert at calculating the price index at Shouguang, in east China’s Shandong province, the largest vegetable distribution center in the country. The first thing she does every morning is to calculate the price of every kind of vegetable that will be traded during the day, and get the price index.

Guo Mingqian, Manager, Dept. Of Veg. Price Index, Shouguang, said, “We’ve already got today’s index. It’s 65.01. It has dropped almost 57% by comparison with the highest point in the third quarter of the year, which was 151.24.

According to Guo Mingqian, vegetable prices had been rising since July until it reached its highest point in August. But since then it has been decreasing. The reason for the decrease might be the favorable weather condition since August which has helped to increase the output of production.

Guo Mingqian, Manager, Dept. Of Veg. Price Index, Shouguang, said, “The fall in temperature and the low frequency of rainy weather has led to the output growth, thus ample supply, and low prices.

Guo Mingqian is not the only one who has noticed the change of the prices. In fact, nearly all the sellers at the distribution center are complaining about this. At the beginning of the year, the cost of a Chinese cabbage was higher than the price of half a kilo of pork..

Jiang Xiangyang, Vegetable Seller, said, “The price for the Chinese cabbage was once one yuan half a kilo, but now it’s 20 fen, or 3 cents. The increase of supply has lowered the price.”

Jiang Xiangyang has been doing this business for almost 30 years. He believes that the weather condition is not the only cause. The expansion of production scale has also played an important role.

Jiang Xiangyang, Vegetable Seller, said, “The old time has already passed. The expansion of production and the development in transportation have led to the fact that there is always enough supply everywhere.”

Vegetable prices have lowered, and so has the price of meat.

“The price is now around 4.5 yuan, but it used to be more than 5 yuan in September.”

Besides the lower food prices, the producer price has also dropped, which has helped to slow down the CPI growth.

Pan Jiancheng, Deputy Director, China Economic Monitoring Center, said, “It’s because economic growth started to slacken that all the companies are willing to sell their products at a low price. These companies include those that sell primary materials. The decrease of the price of primary materials has reduced the price of final products.”

Economists predict CPI will remain at a relatively low level for the remainder of the year, and it’s highly likely the government will curb the inflationary rate within the 4 percent target this year.

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