September 26, 2023

U.S. Housing Recovery Seems Still on Track

For now, though, builders are building, sellers are selling and mortgage lenders are less nervous about extending credit to buyers.

The heady price increases in the first half of the year slowed a bit in July, according to data released on Tuesday.

But in the face of pent-up demand and emboldened consumers, home values were still heading upward at a healthy pace, rising 12.4 percent from July 2012 to July 2013, according to the Standard Poor’s Case/Shiller home price index, which tracks sales in 20 cities.

A separate index of mortgages backed by Fannie Mae and Freddie Mac showed an 8.8 percent gain in prices over the same time period.

Two national homebuilders, Lennar and KB Home, reported significant revenue growth and profits in the third quarter. Lennar said its third-quarter earnings rose 39 percent over the third quarter of last year, and KB said its profit had increased sevenfold.

“We still have a lot of young people that are going to start moving out and forming households and we’re going to have to find housing for them,” said Patrick Newport, the chief United States economist for IHS Global Insight. “There are shortages of homes just about everywhere.”

Higher home prices help the economy not just by strengthening the construction and real estate industries, but by making homeowners feel wealthier and more likely to spend.

While the number of Americans who lost the equity in their homes in the housing crash set records, rebounding prices have helped nudge more and more households back above water. According to CoreLogic, 2.5 million households regained equity in their homes in the second quarter.

Mr. Newport said the full effects of higher mortgage rates had probably not shown up in the numbers yet.

Rates increased from about 3.4 percent on 30-year fixed-rate loans in January to about 4.4 percent in July, according to a survey by Freddie Mac, and many loans were written at even higher rates this summer. But they remain well below typical rates in recent decades, and mortgage borrowing costs have already eased a bit from their recent peak now that the Federal Reserve opted last week not to begin a wind-down of stimulus measures.

Rising rates may not torpedo the housing market recovery, but they have made refinancing much less appealing.

The number of mortgage applications for purchases has climbed by 7 percent over the last year, according to the Mortgage Bankers Association, but refinance requests have fallen by 70 percent since early May.

As a result, banks have laid off thousands of workers in their mortgage units. Citigroup laid off 1,000 workers from its mortgage business, it said on Monday, following Wells Fargo and Bank of America, which have both done layoffs in recent months.

Refinancing also gave households more spending power as it lowered monthly payments.

Analysts offered a cornucopia of reasons for the continuing strength of the housing market: people rushing to buy before prices and interest rates increased further, a gradual relaxation of lending standards, an uptick in inventory, a smaller share of foreclosures in the sales stream and large-scale buying by investors looking to put houses on the rental market.

Still, some analysts questioned whether fundamental factors like job and wage growth would sustain the market and restore first-time buyers to the market. Others warned of a lurking shadow inventory.

“While recent results have been considerably better than those seen earlier in the cycle, and also better than we had anticipated, we have not given up on the argument that a large supply overhang of existing homes (factoring in all those in foreclosure or soon to be) promises to keep pressure on prices for some time,” Joshua Shapiro, the chief United States economist for MFR, wrote in a note to investors.

Once the backlog of demand is absorbed, continued strength will depend heavily on consumer confidence. That’s where politics, including a looming battle over federal spending and the debt ceiling, could stall improvement.

“The real test will come over the next few months, given the sharp drop in mortgage demand and the potential for a rollover in consumers’ confidence as Congress does its worst,” wrote Ian Shepherdson, an economist with Pantheon Macroeconomics.

On Tuesday, the Conference Board, a New York-based private research group, reported that Americans’ confidence in the economy fell slightly in September from August, as many became less optimistic about hiring and pay increases over the next six months. The September reading dropped to 79.7, down from 81.8 the previous month, but remained only slightly below June’s reading of 82.1, the highest in five and a half years.

Year-over-year prices were up in all 20 cities tracked by Case/Shiller, but the gains varied widely, from 3.5 percent in New York and 3.9 percent in Cleveland on the low end to a frothy 24.8 percent in San Francisco and 27.5 percent in Las Vegas.

The month-to-month increase in the Case/Shiller index slowed to 0.6 percent, after gains of 1.7 percent in April, 0.9 percent in May and 0.9 percent in June.

Asked if the slowdown in growth was alarming, Robert Shiller, the Yale economist who helped develop the home price index, said no. “I’m not worried. I think that would be a good thing,” he said.

“I’m worrying more about a bubble — in some cities, it’s looking bubbly now.”

Still, Mr. Shiller said, even the bubbliest markets were still well below their peak.

Other analysts raised the same point. Prices in San Francisco are still only at 2004 levels, cautioned Steve Blitz, chief economist for ITG Investment Research. “For those who bought and still hold homes in 2005, ’06 and ’07, they may still be in a negative equity position, depending on the terms of their mortgage,” Mr. Blitz wrote. “Don’t let those double-digit year-over-year percentage gains bias opinion to believe all is all right.”

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Economic Data Lift Chinese Stocks to 3-Month High

BEIJING — China’s annual industrial output rose 10.4 percent in August, beating market expectations, data released Tuesday showed, pushing stocks to a three-month high amid other positive reports.

Fixed-asset investment, an important driver of economic activity, rose 20.3 percent in the first eight months from the same period last year, the National Bureau of Statistics said Tuesday. Retail sales rose 13.4 percent.

China’s power output also climbed for a fourth month in August, official data releasted Tuesday showed, posting the second-highest monthly growth this year in a searing summer.

Power production and consumption have been rising steadily since May, as the economy has stabilized after a prolonged slowdown.

Electricity output was 498.7 billion kilowatt-hours in August, up 4.02 percent from July and 13.4 percent from the same period a year earlier, the statistics bureau said. Production growth in the first eight months of 2013 was 6.4 percent.

Thermal power accounts for nearly 80 percent of China’s total generation, but despite improved electricity consumption, local prices for steam coal, a grade of coal used in power generation, have continued to fall as major coal producers have cut prices to gain market share.

Chinese coal prices have fallen 17 percent so far this year to 540 renminbi, or $88.23, per ton last week, according to the Bohai-Bay Rim Steam Coal index.

Meanwhile, real estate investment rose 19.3 percent in the first eight months of 2013 from the same period a year earlier, while the revenue from property sales rose 34.4 percent, the statistics bureau said.

The increase in investment compares with an increase of 20.5 percent for the period from January to July, while the increase in revenue compares with a 37.8 percent rise in that period.

China has been trying to temper home price increases for the past four years, but its efforts have been partly undone by strong demand that has pushed up prices and by efforts by local governments to sell land to developers for much-needed revenue.

The Shanghai Composite Index ended the trading day up 1.2 percent at 2,237.98 points. The CSI300 index of the leading Shanghai and Shenzhen listings rose 1.4 percent, as both reached their highest closings since early June.

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Sudden Spike in Gas Prices, but Increases May Be Short-Lived

And according to the AAA daily gauge report, the average price of a gallon of regular gasoline is 17 cents more today than just a year ago, at a time when Americans appear to be driving substantially more than last summer.

In the last week, the price rose approximately 7 cents, reaching an average $3.55 on Friday for a gallon of regular grade, the report said. Prices range widely around the country. In South Carolina, for instance, a gallon of regular averages $3.21; in California drivers pay $3.99.

“We’re going to get a little sticker shock at the pump,” said Tom Kloza, chief oil analyst at, a Web site that monitors gasoline prices. “We’ve moved up on wholesale prices anywhere from 35 to 60 cents a gallon since June 28. This summer we are looking at average prices of somewhere between $3.45 and $3.75, and unfortunately I think we will approach the high end of that range pretty shortly.”

The recent price increases can be attributed mainly to higher global crude prices that have been creeping up because of the unrest in Egypt, brief export failures in Libya and Iraq and disruptions of Nigeria’s oil pipelines. Egypt is not a major oil producer, but instability there raises fears of a possible blockage of the Suez Canal, a major thoroughfare for oil exports and spreading unrest in the region.

West Texas Intermediate, the main American benchmark, has been rising for more than a week, partly because higher demand among summer vacationers has caused a sudden large drop in American inventories. Many experts say they believe that the American benchmark price, which has been depressed relative to global benchmarks in recent years, could remain somewhat higher for a while because new pipelines and railroad lines are gradually relieving bottlenecks for oil produced and stored in the Midwest.

In storage and delivery centers like Cushing, Okla., for example, excess inventories of landlocked oil that could not be easily transported made the oil cheap. But now that supplies are moving around the country more regularly, wholesale and retail prices are rising.

Stockpiles in Cushing fell by 2.7 million barrels last week alone, reaching the lowest levels of the year.

In recent years, a weaker economy and more fuel-efficient vehicles combined to lower American gas consumption, before this summer’s blip of vacation driving bucked the trend. And few oil experts expect a long-term increase in oil and gasoline prices. The rapid growth in United States oil production, coupled with sluggish demand in Europe and slowing growth in China and much of the developing world, is expected to restrain prices. Some experts predict a decline in oil prices over the next year.

“You will see oil prices hover somewhere in the $70 to $100 range,” Harbir S. Chhina, an executive vice president for Cenovus Energy, a major Canadian oil company, predicted for the United States oil benchmark in an interview last month.

The United States benchmark has broken out of that band for the first this time year in recent days to just over $105, representing about a $20 rise from last July. Crude prices, in the United States and abroad, rose approximately 1 percent on Friday.

Global oil production remains robust and some recent supply problems are easing. Two Libyan oil export terminals that were shut down in recent weeks by militias and disgruntled employees have resumed operations. The Kirkuk-Ceyhan pipeline, a major outlet of oil from Iraq’s northern oil fields, is returning to operations this week after being suspended since June 21 because of a leak and an interruption of repair work after an ambush on a crew of technicians.

Oil experts warn, however, that there is no telling when the next political crisis will come in the Middle East or North Africa.

“Oil price predictions used to be about oil consumption and markets, but now it’s about where the next riot will break out,” said Stale Tungesvik, a senior executive at Statoil, the Norwegian oil giant. “It’s so much more politically based, and that makes it a mystery to everyone.”

This article has been revised to reflect the following correction:

Correction: July 12, 2013

An earlier version of this article misspelled the surname of a senior executive at Statoil. He is Stale Tungesvik, not Tugesvik. It also misspelled the name of a Canadian oil company. It is Cenovus Energy, not Cenovis Energy.

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Profit Dives at Washington Post Co., as Its Education Unit Falters

Net income was $4.7 million, or 64 cents a share, an 85 percent drop from $31 million, or $4.07 cents a share, in the same period a year earlier.

The company said the results were influenced by $25 million in costs attributable to early retirement, severance and restructuring. The company also suffered from a $4.6 million foreign currency loss.

Income from continuing operations fell to $6.1 million, compared with $13.4 million in 2012.

The company’s total revenue for the quarter rose slightly to $959 million. But over all, newspaper division revenue declined by 4 percent to $127.3 million. Print advertising at The Washington Post dropped by 8 percent, to $48.6 million, primarily because of decreases in retail and general advertising.

The Washington Post newspaper also suffered from a decline in circulation as the company introduced price increases for its daily home delivery and its newsstand sales. Average daily print circulation declined by 7.2 percent to 457,100 and average Sunday circulation declined 7.7 percent to 659,500.

The figures reported on Friday reflect the steep financial challenges The Washington Post is facing as more readers migrate to digital formats. According to the latest earnings report, The Post started in February to further trim its newsroom staff through incentive programs.

The Post’s digital properties were more promising. Revenue driven mainly by and Slate jumped by 8 percent to $25.8 million. While revenue from online classified advertising on dropped by 6 percent, online display advertising revenue jumped by 16 percent.

The company’s Kaplan education division also contributed to its losses. Its revenue declined by 3 percent in the quarter, to $527.8 million, as it continued to incur restructuring costs. The company expects more restructuring costs in the coming months.

There were a few bright spots in the earnings report. Revenue from the cable television division grew 5 percent in the first quarter to $200.1 million. Television broadcasting revenue also grew by 5 percent, to $85.3 million, because of growth in advertising.

The company also announced during the first quarter its plans to move out of its downtown Washington headquarters to save money. A real estate broker said the company would probably sell the building to a developer that would raze it and rebuild on the location.

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Economic View: Why Home Prices Change (or Don’t)

WHAT prices will today’s home buyers get if they sell a decade from now?

Most people live in their home for many years. They don’t need to view it as an investment at all, but if they do, they surely need a long forecasting horizon.

The problem is that modern economics has a poor understanding of past movements in home prices. And that makes the task of predicting the state of the market in 2023 challenging, at the very least. Still, we can learn something by analyzing the factors that affect home prices in general.

There has been some good news lately: home prices have risen over the last year, and with those gains there has been a renewed sense of optimism. But do these price increases mean that homes are now good investments for the long haul?

Unfortunately, no. We do know one thing from economic research: one-year home price increases, after correcting for inflation, have had almost no statistical relationship to increases 10 years down the road. Thus, the upturn last year is irrelevant to long-run forecasting. Booms are typically followed by busts, usually in far less than 10 years. In a decade, an entire housing boom, if there is one in inflation-corrected terms, is likely to have been reversed and completely washed away.

Inflation has a major impact on long-term home prices. So do the costs of construction. We’ll examine these factors now, and turn to other important influences like speculative pressures and cultural and demographic trends in subsequent columns.

Home prices look remarkably stable when corrected for inflation. Over the 100 years ending in 1990 — before the recent housing boom — real home prices rose only 0.2 percent a year, on average. The smallness of that increase seems best explained by rising productivity in construction, which offset increasing costs of land and labor.

Of course, home prices are likely to be much higher in 2023 when measured in nominal dollars — those that aren’t inflation-adjusted. Inflation is the deliberate policy of the Federal Reserve, with a target rate now of 2 percent a year as measured by the personal consumption expenditure deflator, or about 2.4 percent on the Consumer Price Index. At those rates, nominal prices will be roughly 25 percent higher, over all, in a decade.

All else equal, the current Fed policy would have this effect: a home selling for $200,000 today will sell for around $250,000 in 2023, though the real price — corrected for inflation — would be unchanged. But because people often forget to correct for inflation, they may have the illusion that the market is improving.

In an ideal world, steady and uniform inflation would have no effect on rational decision-making because it affects incomes as well as prices. But in the real world, inflation does affect our psychology. People feel more optimistic when their nominal pay rises or when a neighbor’s house sold for more than they paid for theirs. But in thinking about investments for the long term, we should focus on fundamentals — on real, inflation-corrected values and on the economics behind them.

Here is a harsh truth about homeownership: Over the long haul, it’s hard for homes to compete with the stock market in real appreciation. That’s because companies whose shares are traded on a stock exchange retain a good share of their earnings to plow back into the business. The business should grow and its real stock price should also grow through time — unless the company makes poor decisions, as some certainly do.

By contrast, real home prices should decline with time, except to the extent that households shell out some money and plow back some of their incomes into maintenance and improvements, because homes wear out and go out of style.

Housing is an ambiguous investment to evaluate, because a good part of its real return typically comes in its providing a place to live, not in providing dividends paid in cash. For example, a homeowner may gradually realize that she doesn’t need all of the space in her house, but may not be emotionally prepared to start recapturing some of its economic value. The owner may not want to take in roomers, to use the old phrase, just as a modern renter may not want to live in a room in someone else’s home (though new markets like are aiming to change that mind-set).

Next week, a look at real estate bubbles. Robert J. Shiller is the Sterling Professor of Economics at Yale.

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Bucks Blog: Home Values Rise Quickly but Unevenly

A home for sale in California.Associated PressA home for sale in California.

Home values rose nearly 6 percent in 2012, according to year-end data from the real estate Web site Zillow. But such increases aren’t likely to continue.

The increase is the largest annual gain since 2006, near the peak of the housing bubble, and is greater than the typical appreciation seen in healthy markets. Zillow forecasts an increase next year of about 3.3 percent, more in line with typical housing market appreciation. (Historically, annual appreciation averages about 3 percent, according to Zillow’s research.)

Stan Humphries, Zillow’s chief economist, said he expected the housing recovery to continue this year, but at a “more sustainable” pace. Tight inventory in some markets, combined with strong demand and a slowing pace of foreclosures, contributed to the rise in values, he said. As values rise, fewer homeowners are underwater, or owe more than their home is worth, and may be more willing to put their homes on the market. The increase in inventory, in turn, should moderate future price increases.

As home values rose in the fourth quarter, foreclosures slowed, to 5.22 of every 10,000 homes nationwide in December. That was the lowest pace since November 2007, when the rate was 5.18 per 10,000 homes, Zillow said. Sales of foreclosed houses stood at 12 percent of the market, down 4 percent from the end of 2011.

The housing recovery, however, is uneven. Phoenix, for instance, which has had strong investor interest, showed an increase of more than 22 percent year-over-year, a pace reminiscent of the real estate bubble. Cincinnati and Chicago, meanwhile, showed slight declines. Seven of the top 30 metropolitan areas in the study, however, showed an increase in home values of 10 percent or more.

While it’s encouraging to see housing values rise rather than fall, there’s a risk that consumers may get used to such large increases and expect them to continue, Mr. Humphries said. And that’s probably not a good thing. The recent volatility in the housing market makes it easier to think of housing as a shorter-term, speculative investment, he said, rather than as a place to live. “Housing should be thought of as a long-term investment.”

Has the recent rise in home values changed your perspective on housing as an investment?

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ConAgra’s Net Income Beats Expectations

ConAgra Foods, like many food companies, is dealing with higher prices for ingredients, packaging and fuel and has raised its prices to offset those increases.

“The marketplace environment remains difficult due to continuing inflationary pressures and the impact of the current economy on consumers, so we are cautious about business conditions,” said Gary Rodkin, the chief executive.

But Mr. Rodkin acknowledged price increases were helping offset higher costs.

“We’re not declaring victory, but we’re making good progress,” he said during a call with analysts.

The results for the company, based in Omaha, Neb., were better than analysts expected, and ConAgra reaffirmed its fiscal 2012 outlook. Its shares rose $1.02. or 4 percent, to $26.19.

Net income fell to $171.8 million, or 41 cents a share, compared with $200.9 million, or 46 cents a share, in the period a year earlier. Excluding one-time items related to derivatives and restructuring, net income was 47 cents a share.

Revenue rose 8 percent, to $3.4 billion from $3.15 billion.

Sales of branded consumer foods, the company’s largest division that makes up 63 percent of sales, rose 4 percent, to $2.18 billion.

Top sellers were Banquet, Chef Boyardee, Hunt’s, Marie Callender’s, Orville Redenbacher’s and others.

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Fed Chief Raises Doubts on Recovery

Mr. Bernanke said that the Federal Reserve has acted forcefully to support growth and that it stood ready to do more. But he emphasized that the rest of the government also needs to act on problems including the federal debt, unemployment, housing, trade, taxation and regulation.

“Monetary policy can be a powerful tool, but it is not a panacea for the problems currently faced by the U.S. economy,” Mr. Bernanke said. “Fostering healthy growth and job creation is a shared responsibility of all economic policy makers.”

Mr. Bernanke began his testimony Tuesday by repeating his basic assessment that the economy has grown more slowly than expected, because of unexpected setbacks like the Japanese earthquake and the European debt crisis and because of domestic problems like the ongoing housing crisis.

“The recovery from the crisis has been much less robust than we hoped,” he said, although he also reiterated that the Fed expects faster growth going forward.

The Fed’s primary policy focus is on the pace of price increases, or inflation, which it seeks to maintain at a steady annual rate of about 2 percent. Prices have increased more quickly over the last year, but the Fed has predicted that the increases will abate, and Mr. Bernanke reiterated that forecast Monday.

But Mr. Bernanke’s description of the economic outlook sounded slightly more worried. He has previously said that the economy would recover so long as the government did nothing to interfere, for example through severe short-term spending cuts. On Tuesday, he seemed to suggest that the government needed to act to preserve the recovery.

“We need to make sure that the recovery continues and doesn’t drop back,” Mr. Bernanke told the Joint Economic Committee.

Mr. Bernanke said that the Fed has not exhausted its options.

The central bank, he said, “is prepared to take further action as appropriate to promote a stronger economic recovery in the context of price stability.”

But his emphasis once again was on the need for the rest of the government to act.

He said that the government should keep four goals in mind: reducing debts to a level that was sustainable in the long term; avoiding short-term reductions that could impede recovery; adjusting spending and tax policies to support growth; and improving the government’s decision-making process.

“There is evident need to improve the process for making long-term budget decisions, to create greater predictability and clarity, while avoiding disruptions to the financial markets and the economy,” Mr. Bernanke said.

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Bernanke Says Fed Would Consider New Stimulus Effort

The unexpected weakness is forcing the Fed to reconsider its determination early this year to refrain from new efforts to stimulate growth. While no additional actions appear imminent, Mr. Bernanke said in Congressional testimony Wednesday that the Fed would be prepared to act if necessary.

He described options including an explicit commitment to maintain its stimulus efforts for a longer period, the resumption of asset purchases and steps that would encourage commercial banks to use the reserves they currently keep on deposit with the central bank.

“I think we have to keep all the options on the table,” Mr. Bernanke said before the House Financial Services Committee. “We don’t know where the economy is going to go.”

Members of the Fed’s policy-making committee discussed the possibility of additional efforts at their most recent meeting, at the end of June, but they were divided regarding the costs and benefits, according to minutes of that meeting, which the Fed released on Tuesday.

Mr. Bernanke made clear Wednesday that a resumption of the central bank’s economic revival campaign faces a high hurdle. He said that the Fed would look for two conditions: economic weakness beyond current expectations and a renewed threat of deflation.

The first seems obvious to most people. The second, however, may the more important factor. The Fed’s decision to resume asset purchases last summer was made in large part because the central bank feared that prices might begin to decline, a phenomenon that can undermine growth because it causes people to delay purchases, fueling a downward cycle.

The pace of price increases since then has rebounded toward levels that economists consider healthy. Indeed, earlier this year, concern shifted to the possibility that prices were rising too fast. The Fed’s most recent forecast, last month, projected little risk of deflation.

Mr. Bernanke maintained his view, however, that a recent rise in inflation is unlikely to persist, consistent with his view that “this is still not a very strong recovery.”

Since he last spoke, however, the government reported that employment increased by only 18,000 jobs in June and that exports were weaker than expected. That has led a number of private forecasters to slash estimates of second-quarter growth. And Mr. Bernanke’s remarks on Wednesday reflected greater concern about the health of the economy.

Among the headwinds facing the economy is “the slow growth of consumer spending, even after accounting for the effects of food and higher energy prices,” Mr. Bernanke said in his prepared testimony. “The ability and willingness of consumers to spend will be an important determinant of the pace of the recovery in coming quarters.”

Later, Mr. Bernanke described the Fed’s economic projection for the rest of this year — growth of about 3.5 percent — and said, “We’ll see if that’s the case.”

Members of Congress questioned Mr. Bernanke repeatedly about the nation’s financial problems, seeking to draw him into agreement with their positions. Mr. Bernanke refused.

“I want to see the numbers add up,” he said. “I want to see the revenues and expenditures balanced. That’s your job and that’s why you get paid the big bucks.”

He warned, however, that Congress needs to raise the debt ceiling, the maximum amount that the federal government is legally entitled to borrow. Failure to do so, he said, would cause a “huge financial calamity.” And he compared the arguments against an increase to “having a spending spree on your credit card and then refusing to pay the bill.”

The hearing included a moment of early levity. Representative Ron Paul, a Texas Republican who favors closing the Fed and has often sparred with Mr. Bernanke, recently announced that he would not run for reelection next year. He opened his remarks Wednesday by suggesting that the news of his departure might have caused Mr. Bernanke to smile.

Amidst the ensuing laughter, Mr. Bernanke was unable to resist.

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China Expects Inflation to Keep Climbing for a While

HONG KONG — The rate of inflation in China, which has become a major issue for policy makers in Beijing this year, is set to rise further this month before moderating later in the year, the National Development and Reform Commission said Wednesday.

The commission’s statement echoed what many independent economists have been projecting for some time: that consumer prices will continue to be pushed up over the summer and will probably prompt more interest rate increases from the central bank in the next few weeks.

“Current overall price levels are in the high range and in coming months will remain relatively high, but over all the situation is controllable,” the commission said.

Soaring growth and free-flowing bank loans last year helped fuel sharp rises in the prices of homes and consumer goods. The central bank has responded with a series of steps to rein in lending and has also raised interest rates in small increments four times since last October.

Those measures have begun started to slow down the red-hot pace of China’s growth, as intended.

The rate of price increases has remained stubbornly high in part because of sharp rises globally in the costs of raw materials. Natural disasters in China also have helped push up the cost of food.

Annual consumer price inflation hit 5.5 percent in May, and many analysts believe the figure could increase to 6 percent or more this month — a sentiment that the Chinese economic planning commission’s statement Wednesday appeared to support.

The commission stressed that inflation rates would moderate later in the year.

Even so, the authorities in Beijing are intensely aware that soaring household bills could lead to widespread public dissatisfaction.

China’s rapid growth has generated higher incomes for many Chinese, and a report Wednesday by Mercer, a human resources consulting firm, said competition for executives in China had become “acute,” leading to double-digit wage increases for them this year.

Still, the rising price of food has a substantial effect on ordinary Chinese. The price of pork, for example, soared to 27.67 renminbi, a kilogram, or $1.94 a pound, last week, surpassing a record set in 2008, the state-run China Daily said.

Analysts at the investment bank Nomura commented in a research note Wednesday that retail pork prices would rise even more sharply this month, “which, together with the trend rise in nonfood inflation, means we believe there is a fair chance that C.P.I. inflation may exceed 6 percent year-on-year in June,” referring to the consumer price index.

Alice Woodhouse contributed reporting.

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