July 4, 2007

Chinese study says global grain price hike would not cause inflation

The recent global increase in grain prices would not cause significant inflationary pressure globally or in China, a study by researchers at the country's National Bureau of Statistics said.

The report noted that although soaring grain prices, driven partly by demand for crop-based fuels, are pushing up food prices globally, the impact of the food price hike on China is limited and would not create serious inflation problems

This is because food prices do not play a major role in the general global price growth and that major grain-producing countries would soon expand production in response to the price increase, the report said.

Moreover, China's grain inventories are above the minimum safety threshold, while grain prices are not likely to continue rising, the report said.

China's consumer price index in May was up 3.4 percent, the highest single-month level since 2006.

Food prices, which make up about a third of China's consumer price index, rose 8.3 percent in May, while non-food prices was just 1 percent higher. China's pork prices have risen recently in tandem with rising feed prices, prompting government measures to curb price increases and secure pork supplies.