I believe that the inflation we are currently experiencing is part of a wider global issue. Let's take a look at the international environment in this respect. Some countries have pursued a quantitative easing monetary policy and that has caused drastic fluctuations in the exchange rates of some major currencies and the global commodity prices.
This has not merely affected one place or region in the world. Actually, we have seen an around 2-percent inflation rate in European countries. In the past few months, global grain prices have risen by 15 percent, and the political situation in some North African countries and West Asian countries have driven up global oil prices, and the prices have hit over $100 per barrel.
The imported inflation has had a big impact on China and it is not an easy factor to control.
At the same time, we have also witnessed structural inflation in China due to rising labor costs and rising prices of primary goods.
That's why the government has given top priority to curbing inflation for its macroeconomic control this year.
I have explained the measures that we will adopt to control inflation and manage inflation expectations in great detail in my government work report, so I will not repeat myself here.
I just want to emphasize that the government has the confidence that it will be able to anchor inflation expectations.
In November last year, China's consumer price index rose to 5.1 percent. With hard effort, we managed to bring it down to 4.6 percent the next month, that is December last year.
We still face a difficult situation in the first half of this year. I think you are well aware of the carryover effects on the CPI.
In January this year, the CPI rose to 4.9 percent, and stayed at the same level in February. But there was a carryover effect of 3.7 percent in February.
Therefore, we must not take this issue lightly.
We have taken the following measures to manage inflation expectations. First, we will continue to develop production, in particular, agricultural production, to ensure sufficient supply. Second, we will improve the distribution system. In particular, we will enhance the weak links in agricultural product distribution. Third, we will make use of economic and legal instruments to manage the market and maintain a good market order.
We will continue to take persistent efforts to manage inflation expectations.
Our measures to bring down rising housing prices are three fold.
First, we must mop up excess liquidity. That is actually important for both the control of housing prices and of consumer prices, because that will help us eliminate the monetary conditions for surging consumer and housing prices.
Second, we will make use of fiscal, taxation and financial instruments to adjust market demands.
Third, we must intensify the responsibility of the local governments in these aspects. Local governments must assume their due responsibilities for controlling consumer and housing prices. That includes: provincial governors must take responsibility for the supply of staple food, and mayors will be responsible for the supply of vegetables. And in terms of bringing down surging housing prices, it is local governments that will assume general responsibility.