Soaring oil prices will have little impact on Chinese consumer inflation, but will place considerable cost pressure on the country's manufacturers, a government adviser and ministry official said on Thursday. The weighting of oil in China's consumer price index (CPI) is too small to push the inflation gauge up by much, said Deng Yusong, an economist at the Development Research Centre, a think tank under the cabinet.
Separately, a senior official from the industry ministry warned that sky-rocketing oil costs bore close watching as a potential drag on manufacturing growth. The comments underlined growing worry, but not alarm, in the government after oil prices hit a 29-month high on Thursday because of fears that political unrest in Libya could spread to other oil producers in the region.
"In the last decade, food and housing prices accounted for 90 percent of China's CPI change," Deng said in a report published on Hexun.com, a Chinese financial news website. "So the impact of oil price changes on CPI is relatively small, but the impact of oil prices on the producer price index may be quite deep."