China's war on inflation ramped up a gear this week, with central bank Governor Zhou Xiaochuan promising "stronger policies" following the government's latest fuel-price increases.
"Higher energy prices will send some pressure to the consumer price index, so we may have stronger policies against inflation," Zhou said without further elaboration. Average monthly inflation climbed to 8.1 per cent during the first five months of 2008, according to official figures, reaching a 12-year high of 8.7 per cent in February. Last Thursday, China raised gasoline and diesel prices by as much as 18 per cent, and increased power tariffs.
"It's hard to say whether inflation will continue to ease for the rest of the year," Zhou told reporters in Washington, after meetings
with U.S. Treasury Secretary Henry Paulson. "We need to closely monitor it."
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