Modest price hikes acceptable, NDRC says

China may see a modest rise in consumer prices which is inevitable and acceptable at a time when China is undergoing an economic transformation, a senior official at the country's top planning agency said.

China has to push reforms in the pricing of resources and levy charges to protect the environment, which could increase the costs to enterprises and eventually to consumers, Peng Sen, vice chairman of the National Development and Reform Commission, said in remarks published yesterday on the central government's website.

"However, as long as the rise in prices can be controlled within a reasonable range that is notably lower than the rate of economic expansion and income growth, such a controlled and mild increase will be acceptable to society," Peng said.

China's Consumer Price Index, the main gauge of inflation, rose 3.6 percent in March from a year earlier, accelerating from a 3.2 percent increase in February. The March reading was higher than expected partly because of higher food costs. The higher inflation made it harder for the government to adopt stimulus measures needed to forestall a hard landing in the world's second-largest economy.

Premier Wen Jiabao last month set a 4 percent target for inflation this year, which some economists said is higher than expected and could offer room for more reforms in energy and utility pricing, which may see higher bills for petrol, electricity and gas.

Peng's remarks also came at a time when Chinese consumers are facing a new round of price increases in daily necessities.