China must not loosen macro economic controls and should prevent rapid price rises in some sectors from escalating into broader inflation, President Hu Jintao said on Tuesday.
China's annual consumer inflation stood at a decade high of 6.5 percent in October, but the fact that the spike was fuelled mainly by food price rises has persuaded policy makers that China is not facing serious inflation.
Hu said a priority of economic policy was to keep inflation in check. "The biggest priority of the macro economic control is to prevent the fairly fast expanding economy from boiling over and structural price rises from turning into conspicuous inflation," state radio quoted Hu as telling a meeting of the Communist Party's political bureau.
Food prices, which make up a third of China's consumer goods basket, rose 17.6 percent in the 12 months to October. Meat prices, making up about 4 percent of the CPI basket, rose 38.3 percent in October from a year earlier. And pork, China's staple meat, was up 54.9 percent.
"We should redouble efforts to increase production and supply of key goods so as to keep prices on a stable level," Hu told the meeting, a gathering of major policy-makers to review current economic trends and map out policy for next year.
China's economy expanded by 11.5 percent in the first nine months, extending four years of double digit growth. The red-hot expansion aroused concerns that it might not be sustainable because of a heavy reliance on exports and investment.
Besides administrative levers such as credit controls and higher market entry standards, China has increased banks' reserve ratio nine times this year and interest rates on five occasions.
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