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Experts: Cooling inflation leaves room for policy adjustments (3)

By Lu Hui (Xinhua)

14:03, November 14, 2011

Yao estimated that overall, the price control policies pursued in the first half of this year will have delayed positive effects on the prices for the last two months, or extending to the first quarter, or even through the whole of 2012

"It is a clear signal that prices are entering a declining cycle and monetary policy has managed to achieve an economic soft landing," said Lu Zhengwei, chief economist of Industrial Bank Co Ltd, forecasting that CPI for November and December will fall down to 5.0% and CPI for the whole year would be in a 5.4 -5.6 percent range.

"The October CPI data showed that the government's price control efforts have started to pay off," said Zhang Liqun, a macroeconomic researcher with the Development Research Center of the State Council, or China's Cabinet.

A research report published by the Bank of Communications pointed out that the inflation turning point has arisen within the year, with prices continuing to fall until early next year.

Lu Zhiming, a researcher with the Bank of Communications, attributed the weakening inflation to price declines in farm and non-farm products and accumulated efforts of monetary tightening introduced in previous months, as well as commodity price drops resulting from the lingering European debt crisis.

"Prices are now on a downward trend and the CPI reading will weaken further in the fourth quarter, bringing the full-year CPI rate to around 5.5 percent," Lu said.

Over the next two years, the average inflation rate will fall to between 2.8 percent and 4 percent, but the government should be vigilant in countering inflation risks in the medium and long term, he added.

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