Beijing faces 5.3% CPI increase

Beijing faces 5.3% CPI increase

• Source: Global Times
• [09:04 March 15 2011]
• Comments

Customers select tomatoes at a Beijing supermarket in March. Food price hikes were one of the reasons for the previous month's high CPI increase. Photo: IC

By Xuyang Jingjing

Beijing's consumer price index (CPI), the key indicator for inflation, climbed a record 5.3 percent in February, with housing prices contributing to almost half of the increase, according to figures released by the Municipal Statistics Bureau Monday.

The CPI has risen steadily since last September, and February's increase, 0.4 percentage points higher than the national average of 4.9 percent, is a record high for the past 29 months, according to statistics.

"My family now collects coupons and only buys leftover vegetables in the supermarket because it's cheaper," said Beijing taxi driver Xu Degui. "What's more stressful is that while the prices are rising, our salaries aren't increasing accordingly."

International oil and food price hikes contributed to the high CPI, but the main reason is the delayed effects of property speculation in Beijing, said Ding Zhijie, vice dean of the School of Banking and Finance at the University of International Business and Economics.

While food prices are the number one driver of inflation nationwide, in Beijing rent and other housing costs contribute the most to the CPI, statistics bureau spokesperson Yu Xiuqin told the Global Times Monday.

Housing prices in February rose by 11.2 percent year on year, contributing to nearly half of the inflation, followed by a 9 percent increase in food prices.

Rent prices also increased by 15 percent year on year in February, according to the statistics.

"It's because of Beijing's special location [as the capital]," Yu said. "There's a seasonal hike in rent prices in February as migrant workers flood back to the city."

Yu allowed that housing purchase restrictions raised the demand for rental housing, leading to rent hikes.

"But the central government is asking local governments to build more affordable rental housing, and that will help curb rising rents," she explained, adding that the statistics bureau has advised the municipal government to put more effort into controlling rent prices.