China's CPI likely to peak in August: economist

15:47, August 22, 2010      

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China's consumer price index (CPI), one of the main gauges of inflation, will peak in August before starting to fall in the following months of the year, an economist said Sunday.

"The CPI is likely to surpass 3.3 percent in August but that will be the highest level for the year," said Lian Ping, chief economist at Shanghai-based Bank of Communications.

He said commodity prices will remain relatively low in the short term as market concern about a weak economic recovery linger and as the European debt crisis spreads.

Chinese inflation will also ease due to China's slower economic growth rates and a fall in the price of industrial goods, Lian added.

However, long-term inflationary pressures cannot be ruled out, due to potential rises in the cost of food, labor and natural resources, he said.

Lian said he expects inflationary pressures to grow in March and April next year.

Largely on the back of rising food prices after widespread flooding wrecked crops and disrupted shipping, China's July CPI rose 3.3 percent from a year earlier, the fastest rate since October 2008.

The CPI for the first seven months of the year stood at 2.7 percent, below the whole-year target of 3 percent.

Source: Xinhua


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