China Sets Another Model, Shows How to Reduce Inflation Rate

The annual inflation rate in China fell to 5.5 percent in October as a result of government measures to curb rapidly rising prices.

It had peaked in July at 6.5 percent and reduced to 6.1 percent in September. Since October, overall domestic prices have been falling noticeably, Premier Wen Jiabao was quoted as saying by a government Web site.

Various measures for curbing rapidly rising prices were put in place by the government. It appears that these measures are giving positive results to control prices while at the same time not preventing the growth of economy.

One of the biggest drivers behind Chinese inflation has been food prices. Though food prices were up at 14.8 percent annual rate in July, yet they were, to certain extent, moderated to an 11.9 percent rate in October.

Prices of pork and eggs have fallen, but prices of fruit, dairy products, beef and mutton remain at high levels, said Wen. The best way of controlling price rises is to boost production, he added.

Also controlling the housing boom in China has become a priority job for the government. Prices relating to housing were up 4.4 percent in October, which is down from a recent high of 6.2 percent year-over-year increases in June.

While the growth of economy has slowed with the initiatives from the government to curb inflation, the development is still happening in a strong manner.