BEIJING, April 16 (Xinhua) -- China's consumer price index (CPI), a key measure of inflation, was up 8.3 percent in March, following an 8.7 percent rise recorded for the previous month.
Li Xiaochao, spokesperson of the National Bureau of Statistics (NBS), said on Wednesday that the CPI for the first quarter was 8 percent. Prices rose 7.8 percent in urban areas and 8.7 percent inrural areas.
By component, food prices soared 21 percent, accounting for 6.8points of the CPI rise. Housing prices and rents went up 6.6 percent on average, driving the inflation gauge up 1 percentage point.
The first quarter also saw retail prices up 7.4 percent, 5.3 percentage points higher than the year-earlier level. The producer price index was up 6.9 percent, 4 percentage points higher.
Prices of raw materials, fuels and power supply increased 9.8 percent in the first three months of this year, 5.7 percentage points higher than the level for the same period last year. Meanwhile, housing prices in 70 major cities rose 11 percent on average, 5.4 percentage points higher.
According to the NBS, the CPI rose 7.1 percent in January and touched a nearly 12-year-high of 8.7 percent in February, which was partly the result of severe winter weather that disrupted many businesses and activities.
It is believed that food prices contributed significantly to the rising CPI, as they make up about 33 percent of the inflation index.
Liu Shiyu, the deputy governor of the People's Bank of China, the central bank, said earlier that inflationary pressure remained strong in March, although prices were not as much affected as in February by severe winter weather and the Lunar New Year.
A report earlier this week by the Bank of China (BOC), a state-owned commercial bank, said that pricing pressures were likely to persist during the first half. Consumer prices could jump 8 percent as a result of higher factory-gate prices and higher international prices for crude oil and food, the report said.
Tan Yaling, a specialist on the financial industry, said that as a major world trade participant, China has seen its links to international markets grow rapidly.
The BOC report said that rising inflationary pressure wasn't coming only from higher food prices, as many people believed, but was also closely linked to excessive money supply.
Zhu Baoliang, an economist with the State Information Center, said hot money inflows had added to China's money supply, which also gave rise to inflationary pressure.
According to Zhu, more than 80 billion U.S. dollars in speculative funds moved into China in the first quarter, against 120 billion U.S. dollars in all of last year.
Moreover, the lingering effects of price rises in 2007 contributed to inflation in the first quarter of this year, said Xu Lianzhong, an official with the price monitoring center under the National Development and Reform Commission.
NBS spokesperson Li told the press conference that the lingering effect would contribute 3.4 percentage points to inflation for the whole of this year. So, to achieve the annual goal of 4.8 percent for 2007, inflation should be kept within 4.2 percent on average for each of the remaining nine months, Li said.
He noted that China was now financially powerful enough to tame inflation, with annual fiscal revenues increasing by more than 30 percent over the past several years.
The State Council (cabinet) had decided to add 25.25 billion yuan (3.6 billion U.S. dollars) to this year's rural budget, which was set at 562.5 billion yuan earlier. The money will be used mainly to subsidize farmers' purchases of seed, diesel, fertilizers and other production materials, as part of the nation's efforts to stabilize grain production.
Premier Wen Jiabao said earlier this month: "The government will not change its position in supporting farmers, and it will give more and better preferential policies to farmers."
To ensure domestic supply, reducing grain exports was designated as a priority for the State Council in 2008. After earlier scrapping export rebates for most grains, the government then said it would impose export duties of between 5 percent and 25 percent this year.
Meanwhile, the BOC report suggested tight monetary policy should be strictly enforced to reverse the upward inflationary trend. It said that more central bank bills should be issued and the bank reserve ratio raised to curb liquidity and inflation.
Song Guoqing with the China research institute of economics at Peking University predicted that the CPI would rise 6.8 percent for the whole of this year, higher than the annual goal of 4.8 percent.