Major Fluctuations in China's 2009 Consumer Prices

Concerns over possible inflation in China had been increasing this year as the government had frequently stressed inflation expectation management.

China's policy-makers had made controlling inflationary expectations one of their priority tasks at a State Council executive meeting in October.

Inflationary expectation management was again pointed out by the government at the annual Central Economic Work Conference early this month while mapping out the nation's economic development pattern next year.

Following are some major fluctuations in China's commodity prices in 2009:

CONSUMER PRICE INDEX (CPI)

China's consumer price index (CPI), a main gauge of inflation, fell 0.9 percent in the first 11 months of this year, compared with a 6.3 percent rise in the corresponding period last year, according to the National Bureau of Statistics.

It had been falling since February when CPI was down 1.6 percent due to the global crisis, the first monthly fall since December 2002.

The CPI was then back to growth in November, rising 0.6 percent year on year.

The rise in commodity prices was mainly brought about by rising food prices and housing costs, including rents, construction expenses and property management fees.

Food prices, which account for about a third of the CPI, went up by 3.2 percent year on year in November.

OIL PRICE:

Starting from 2009, the government established a new oil pricing mechanism by changing benchmark retail prices of oil products when the international crude price rises or falls by a daily average of 4 percent over 20 days.

The new mechanism aimed to indirectly link domestic prices to global crude prices "in a controlled manner", after domestic refiners suffered huge losses because of a gap between government-set retail prices and soaring global crude prices.

The benchmark price of gasoline currently sits at 7,100 yuan a tonne and that of diesel 6,360 yuan a tonne, after five price rises and four cuts in the past year.

The benchmark price of gasoline was 5,580 yuan a tonne and diesel 4,970 yuan a tonne.

WATER PRICE:

Water prices had also been raised in a number of cities in China from early this year. In Beijing, it has been agreed by public representatives at a public hearing that water price would rise to 4.6 yuan (67 U.S. cents) per cubic meter, up 24.3 percent from the previous 3.7 yuan in three years.

Other Chinese cities are also planning or have agreed to raise water prices by around 18 percent, including Shanghai, Tianjin, Shenyang, Guangzhou, Nanjing and Chongqing.

ELECTRICITY PRICE:

China's National Development and Reform Commission (NDRC), the top economic planning agency, announced a rise in the price of electricity for non-residential use by 2.8 fen (0.4 U.S. cents) per kilowatt hour on average nationwide in November.

Residential electricity prices would not be raised this time. However, they would be charged on a progressive basis in the future, which meant prices would increase with consumption, said NDRC.

FOOD PRICES:

China's food prices had seen dramatic growth this year, with vegetable prices registered a weekly growth of more than 6 percent in early December, according to data from the Ministry of Commerce.

Among them, garlic prices had posted a particularly big increase in the second half of this year, driven by the spreading H1N1 flu.

In November, it reached 8 yuan per kilo (1.18 U.S. dollars) in Jinxiang County, China's biggest garlic planting base, Shangdong Province, compared with 0.8 yuan in February. The wholesale price of garlic surged as much as 40-fold from a year earlier in many parts of Shandong Province.