Rising prices for oil and raw materials may lead to further price increases of daily commodities and raise the spectre of inflation, a senior economic planning official warned yesterday.

Zhu Hongren, an official in charge of economic growth at the National Development and Reform Commission (NDRC) the top economic planner said the country is under the pressure of an increase in consumer product prices.

"It's one of the problems China faces besides the spree in fixed asset investment," Zhu told a press conference organized by the commission yesterday.

Crude oil prices have been hovering over US$70 per barrel, or more than 40 per cent higher than in the same period last year; and copper soared to 85,550 yuan (US$10,700) per ton in mid-May, more than double last year's price.

"The price rises of raw materials have increased costs for producers and will eventually push up prices of finished products," said Zhu.

However, Han Yongwen, the NDRC's spokesman, ruled out immediate monetary measures, such as an interest rate rise, to curb the trend.

The economy grew by a sizzling 11.2 per cent in the second quarter of the year, the fastest rate in a decade.

Zheng Jingping, spokesman for the National Bureau of Statistics, also warned last week that consumer prices are quite likely to rise in the second half, although inflation is forecast to remain moderate.

The consumer price index (CPI) grew 1.2 per cent, 1.4 per cent and 1.5 per cent in April, May and June respectively.

The price rises for raw materials, fuel and power could speed up consumer price increases, he said.

Consumers are already feeling the pinch.

A recent national survey of 20,000 households in 50 cities conducted by the People's Bank of China, the central bank, found that one in every four urbanites thinks prices for goods and services are "rather high and unacceptable."

Some experts, however, do not believe inflation is imminent.

Wang Xiaoguang, a researcher with the Macro-economic Research Academy affiliated to the NDRC, said that supply of most products surpasses demand and there is little room for the CPI to pick up.

"There is no evidence that China is facing inflation," he said.

In a related development, the NDRC announced yesterday that government revenues for the first half of the year reached 2 trillion yuan (US$250 billion), or about 66 per cent of the figure for the whole of last year.

The figure was 360 billion yuan (US$45 billion) more than the same period last year, said spokesman Han, attributing it to fast economic growth and improved industrial efficiency.

The NDRC warned local governments not to get carried away by increased revenues and splurge on wasteful projects.

Editor: Yan