SHANGHAI, China - China's producer price index, a key indicator of inflation, rose 8.1 per cent in April over the same month a year earlier, the government reported Friday, as a top economic official sought new controls to cool rising prices.
Greater-than-expected cost increases for raw materials and industrial inputs suggest that recent state media reports of a moderation in the consumer price index may have been premature.
"So far this year, China's economy has continued to grow at a fast pace," Deputy Premier Wang Qishan told a financial conference in Shanghai.
"However, the economy is also facing some problems, mainly reflected in relatively high consumer prices and fixed-asset investment."
Authorities must prevent "fast money supply growth from becoming excessive and structural price increases from escalating to a severe overall inflation," Wang said.
Wang, the former Beijing mayor who recently took charge of China's financial sector, also called for tighter controls on flows of capital across borders - reflecting Beijing's concern over speculative foreign investments.
The government has pointed to excessive investment in fixed assets such as property and factory equipment as a strain on the economy that could trigger a financial crisis.
But surging consumer prices, driven largely by rising food costs, have drawn even greater concern. The communist leadership fears that such soaring prices could trigger widespread unrest.
Energy was a major factor behind April's 8.1 per cent year-over-year surge in the producer price index, up from 8.0 per cent in March, the National Bureau of Statistics reported.
Prices for raw materials, fuel and power rose 11.8 per cent. Crude oil registered the largest gain, surging 37.9 per cent from a year ago, while coal was 20.9 per cent more costly.
China's retail consumer prices were up 8.3 per cent in March, a slight decline from February's 8.7 per cent gain which was the highest inflation rate in nearly 12 years.
Earlier this week, comments by officials suggesting a further drop-off in inflation prompted a surge in share prices.
Investors reacted swiftly to Friday's news. The Shanghai composite index dipped by as much as 2.9 per cent before closing with a decline of 1.2 per cent on the day.
PREVIOUS
