CHINA / National |
Food price hikes begin to grate on Chinese consumers(Xinhua)Updated: 2007-08-02 16:30 BEIJING -- "How am I going to manage my money now? My income remains the same but living expenses are up again," moaned a frustrated Beijing taxi driver. "Now, I'm going to have to pay an extra 100 yuan (US$13.2) a month to eat at the same restaurants," the cabbie continued. He said the Chinese fast food restaurants that he and many of his friends frequented had raised the price of set meals by two to ten yuan each on the back of rising food costs such as pork, eggs and vegetables. It is a significant sum for a Beijing taxi driver who often works more than ten hours a day, seven days a week, for a monthly salary of 2,500 to 3,000 yuan (US$330 to 396). Prices of farm produce in China continued to rise in the week from July 23 to 29, the Ministry of Commerce (MOC) announced on Wednesday. Compared with the previous week, meat prices were up 1.8 percent, with pork up two percent and beef up 1.4 percent. Chinese low-income families have felt the strongest punch as an increasing number of sectors closely related to people's everyday living, ranging from fast food restaurants to instant noodles and even bean product manufacturers announced plans to raise prices. "The meat price is going up and up. So does the price of instant noodles. Now even the price of bean curd is higher! What should we expect next?" a housewife implored as she surveyed the shelves displaying marked-up prices at a Beijing supermarket. According to a survey conducted by the National Bureau of Statistics during the second quarter, about 82 percent of those interviewed in Shanghai, where residents have the highest average income in China, said prices of daily necessities were too high. Some residents have taken a pragmatic approach, diversifying their diet to eat less pork and more seafood, which has hardly been affected by recent price hikes. "If the pork price rises, you just eat less pork. I read that some health experts believe it is good for your health to eat less meat," said a 70-year-old lady at a grocery market. A visit to a couple of major supermarkets in Beijing showed that young customers, especially males, accepted the news of a 20 to 40-percent price rise for instant noodles. Elderly couples, relying on a joint pension of 1,000 yuan, were not as forgiving. Many said they had made special trips to the supermarket to stock up on noodles in the days between the announcement of the price change and its implementation, even though each packet only went up by 0.2 to 0.4 yuan. Many people fear that these small price rises are the just the start of a larger problem in which they will be forced to deal with higher prices across the board. Economists are divided as to whether the rising food prices will lead to large-scale inflation in China. The country's inflation rate came under the global spotlight in mid July when the government announced its consumer price index (CPI) had risen 3.2 percent in the first half of the year, and had recorded a 28-month high of 4.4 percent in June alone, largely driven by price hikes for foodstuffs such as grain, meat and eggs. Xie Fuzhan, head of the National Bureau of Statistics, argued the CPI was not the only indicator of inflation and that he saw no inflation in China at the present stage. He stressed that inflation occurred only when there was too much demand against a weak supply, which is not the current situation in China. Xie, an economist by profession, said prices of many other items such as clothes, cell phone bills and automobiles were actually declining, though prices of pork and eggs had continued to climb in recent months. Both Xie and Lu Zhongyuan, an economist with the Macroeconomic Research Institute of the Development Research Center of the State Council, pointed out that the positive side of the food price hikes was that Chinese farmers could benefit from increased income. A pig breeder named Wang Zhagen in Henan Province said he had been able to earn more than 400 yuan from the sale of each pig since the Labor Holiday - he could only earn less than 100 yuan from each pig a year earlier. The village where he lived were raising nearly 2,000 pigs at present, half of which were born after the pork prices surged, Wang said. Zuo Xiaolei, an analyst with Galaxy Securities, however, is concerned that the price hikes are only evident in the distribution process of goods, instead of when grain and meat are procured from farmers, and that, in actual fact, farmers would see no benefits at all. Zuo also said that the price mark-up in the process after production before it reaches the end user would definitely lead to inflation. Liang Hong, chief economist with the Goldman Sachs (Asia) China, predicted that China's CPI would be pushed to four percent or even higher in a few months on the back of food price hikes alone, well beyond the country's target of three percent set for the whole year. The price hikes of more and more businesses were also widely disputed and suspected of having constituted a price monopoly. A Beijing lawyer has asked the country's pricing authority - the National Development and Reform Commission (NDRC) - to investigate the legitimacy of the recent price jump of instant noodles, saying the collective decision made by producers may have breached China's Price Law and infringed upon the rights of consumers. Business insiders said some fast food enterprises may have increased their prices by as much as 30 percent while the jack-up in raw material prices was only three percent on average. China's top economic planner ruled out any form of united pricing or price hikes by businesses or industry associations, and pledged to strike hard at price irregularities such as price monopolies in a recently published notice. It urged local governments to stabilize the overall price level and at the same time be prudent in price intervention, adding that local governments should continue to allow the market to play the major role in fixing prices. Local governments are prohibited from intervening directly in the price of goods and services that are not subject to government control, except in cases of emergency when an apparent price hike occurred due to a spate of accidents or natural disasters, according to the commission. The commission said the governments should not issue any further price control measures except those related to energy conservation and environmental protection within the year, even if the average price hike went beyond the macro control target. Xie said the Chinese government had already been directly subsidizing pig breeders and providing insurance for female pigs against illness and natural disasters in a bid to tether the pork price with increased supply. It would be around half a year or more before the price of pork, the major factor behind the rising CPI, would fall to a normal level, as the production of pigs could not be increased overnight due to its half-year-long breeding cycle, Xie added. |
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