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UPDATED: December 20, 2010 NO. 48 DECEMBER 2, 2010
Curbing Price Hikes
The Central Government will take whatever measures necessary to stifle inflation

THE PRICE OF PRODUCE: Fresh vegetables are for sale at a supermarket in Ji'nan, Shandong Province. The price of food has been increasing in the second half of this year (FAN CHANGGUO)

As the cold winter air begins to set in, soaring prices have also started putting a chill on people's wallets for utilities and daily necessities.

Wang Jin, a teacher of the Beijing-based Capital Normal University, recently rushed to recharge her household gas and prepaid power card after she heard that power and gas prices would soon be increasing.

"A public hearing held on November 13 said that natural gas for residential use in Beijing will increase 0.23 yuan ($0.03) or 0.27 yuan ($0.04). That is to say, the increase will be about 10 percent. That means my family will need to pay an extra 100 yuan ($15) for natural gas next year," Wang said.

For average residents like Wang, price surges this year will only put more pressure on their lives.

"Vegetables less than 2 yuan ($0.3) per kg seem to have disappeared overnight. Tomatoes were 2 yuan per kg three years ago, and 5 yuan ($0.75) last year, but this year they cost 7-8 yuan ($1.06-1.2)," said Zhang Liyun, Wang's mother.

Three years ago, the family spent 200-300 yuan ($30-45) on vegetables every month, but this year costs are closer to 700 yuan ($105), Zhang said.

According to a third-quarter survey across 50 cities on the website of the People's Bank of China, the country's central bank, 58.3 percent of respondents said commodity prices are "too high." The survey also showed 46.2 percent estimated prices would continue rising in the fourth quarter, up 3.8 percentage points from the second-quarter survey.

Chinese consumer confidence fell in the third quarter, the first drop after increasing for five consecutive quarters, as the pace of inflation quickened, according to the National Bureau of Statistics (NBS).

China was expected to face more pressure from inflation in 2011 because of rising costs of food, raw materials and labor, said Sheng Hongqing, an analyst with the China Everbright Bank.

Soaring food prices

The Ministry of Commerce (MOFCOM) said, in the first 10 days of November the average wholesale price for 18 staple vegetables in 36 large and medium-sized cities increased 62.4 percent year on year and rose 11.3 percent compared to the beginning of this year.

Consumers aren't the only ones affected by the increases. Food dealers are complaining about the increasing prices and the impact on their sales. The price hikes have scared away possible buyers and the total turnover has decreased, said Xia Chun, a vegetable dealer at Xinfadi, Beijing's largest vegetable, fruit and grain market.

"Ninety percent of vegetables must be transported via highways. The diesel shortage and price hikes pushed the vegetable price up. The natural disasters earlier this year have also been anything but helpful," said Chen Mingjun, Vice Secretary-in-Chief of the China Vegetable Circulation Association.

Some gasoline stations have limited diesel purchases to 200 yuan ($30) per visit, causing trucks to make several stops on their routes. This stretch in logistics has also contributed to cost increases, Chen said.

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