Central bank alert on inflation
By Xu Binglan (China Daily)
Updated: 2004-02-25 09:54

The central bank on February 24 warned against looming inflation in 2004 and vowed to control credit growth to fend off inflationary pressures.

In its annual monetary policy report, the People's Bank of China predicted that the country's consumer price index (CPI), the key barometre for inflation, will grow by 3 per cent this year. This compared to 1.2 per cent in 2003.

Driven by rapid economic growth, particularly investments, CPI growth accelerated in the second half of last year, from below 1 per cent to 3.2 per cent in December.

Price hikes of grain and raw materials will spill over well into 2004.

"Even without new factors driving price growth, the index will move to 2.2 per cent by itself in 2004," the report said.

"We really can not be optimistic about the situation of inflation."

The report said the central bank will use various instruments to control excessive lending growth to cool the heating investing activities.