Report: Food price hikes will not cause "serious inflation"

BEIJING, July 4 (Xinhua) -- Recent food price hikes will not lead to serious inflation in China, according to a report co-authored by three officials with the National Bureau of Statistics.
There will be no "serious inflation" unless grain prices rise by more than 20 percent or cause a chain reaction in the prices of industrial products and services, the report argued, without defining "serious inflation".
Food prices rose by 6.8 percent year and prices of consumer goods and services climbed 2.9 percent in the first five months, said the report.
The report acknowledged that meat and poultry prices rose by 22 percent and eggs by 33 percent in May alone but argued that the impact of food price rises on people's living standards would be "limited and temporary".
China's consumer price index (CPI), the country's inflation rate, rose 2.9 percent in the first five months this year, with food prices contributing 76 percent of the hike.
The country's ample grain reserves should act to restrain prices, said the report.
Rising international grain prices have pushed up domestic prices since November 2006 but were unlikely to do so this year, said the report, citing figures from the United Nations, which predicted world grain prices would rise by three to five percent in 2007.