China Tries To Control Inflation

BEIJING (AP) -- China's top economic planning agency Tuesday urged price regulators to take action against politically sensitive rising food prices amid worries about higher inflation.

"Price stability is critical to overall economic development," the National Development and Reform Commission said in a statement posted on its website.

Regulators should strike out at any sort of price manipulation, possibly with criminal punishment in serious cases. They may also temporarily intervene to stabilize prices if necessary, the agency said.

It was the third time in two weeks that the NDRC, a cabinet-level agency, has addressed the importance of curbing rising prices. China's inflation rate, or consumer price index, jumped 2.8 percent in April mainly driven by food prices, with a 14.9 percent rise for vegetables and a 16.4 percent gain for fruit.

The NDRC said China will be able to meet its 3 percent inflation target for 2010, and food prices are expected to drop because warmer weather will help with harvests. Cold weather and illegal speculation were the main reasons behind earlier food price rises, it said.

Investors and companies were worried the recent rise in the inflation rate might prompt the government to raise interest rates or take other steps that might slow down China's economic recovery. As well, higher food prices can cause public unrest.

The NDRC last week forecast that China's inflation rate in May and June should rise to 3 percent.

Associated Press researcher Bonnie Cao in Beijing contributed to this report.

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