China warns of inflation pressure during flood season-NDRC

BEIJING, June 18 Mon Jun 18, 2012 1:06am EDT

BEIJING, June 18 (Reuters) - China will step up monitoring of farm product prices during the summer flood season to detect any spike in inflation that could trigger subsidies or the release of reserves, the National Development and Reform Commission (NDRC) said on Monday.

China's annual consumer price inflation eased to 3.0 percent in May, below expectations and the lowest level since the middle of 2010, but the country's leaders are very sensitive to inflation pressures that could lead to social unrest.

"In order to stabilise the prices of farm products including vegetables during the flood season and prevent an inflation rebound, all price regulatory agencies need to enhance price control and monitoring," the NDRC said in a circular published on its webiste, www.ndrc.gov.cn

The country's top planning agency said provinces which are hit by severe storms and floods should quickly begin monitoring vegetable prices and increase the frequency of price checks.

The NDRC said contingency plans, including releasing stocks and subsidies should be started in the event of disruptions from severe weather or natural disasters.

The recent easing of inflation has allowed authorities to increase stimulus measures to combat the sharpest slowdown in economic growth in three years. In a surprise move, the central bank cut interest rates on June 8, the first cut since the depths of the 2008/09 global financial crisis. (Reporting By Xiaoyi Shao and Kevin Yao; Editing by Ken Wills & Kim Coghill)

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