City's CPI moderated by food and services

By Wang Yanlin  |   2008-12-19  |     NEWSPAPER EDITION

SHANGHAI'S Consumer Price Index last month expanded at the slowest pace since August last year after food and services growths moderated, the Shanghai Statistics Bureau said yesterday.

The city's CPI, the main gauge of inflation reflecting the cost of living, grew 3.6 percent last month from a year earlier. The rate was down from an increase of 4.1 percent in October and this year's record of 7.9 percent in April.

In the first 11 months, Shanghai's CPI jumped 6.1 percent year on year.

The prices of consumer goods rose 4.9 percent last month, easing 0.1 percentage point from a month earlier. The cost of services only gained 0.2 percent, down 1.4 percentage points from October.

The moderation of consumer goods prices was led by food. The cost of edible oil dropped 6 percent last month from the level in October and has been heading downward in the past three months with a total 17.7-percent retreat. The cost of pork also fell 2.7 percent last month from a month earlier, the seventh straight monthly fall.

The prices of edible oil and pork have now returned to a similar level for last year, while other foods, including rice, flour, vegetable, eggs and sea food, all reported lower prices last month, said the bureau.

People spent less money on air tickets and in the catering industry last month because of shrinking demand after the prime tourism season in October. This helped drag down the costs of services.

A sluggish property market also led to a price dip in rents for housing, which dropped 2.8 percent last month from a month ago.

"Shanghai's CPI growth is in line with that of the national trend. We have to ward off the risk of deflation as the city's economic development is facing challenges ahead," said Liu Hui, an analyst with the bureau.

China's CPI grew 2.4 percent from a year ago last month, the weakest gain in nearly two years, the National Bureau of Statistics said. Some economists said the country should pay attention to the trends and prevent the CPI growth slipping into the negative next year, which could be caused by lower demands and uncertainty in the economy.