Central bank says 3% inflation doable

08:24, July 20, 2010      

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The goal of 3 percent consumer inflation rate for the whole year is within reach, Du Jinfu, vice governor of the People's Bank of China (PBC) said Monday.

  China's current inflationary pressures have lightened compared with the beginning of the year, while uncertainties including the grain harvest this summer could put pressures on inflation in the second half of the year, Du said on the sidelines of a forum in Beijing, according to Reuters.

  The consumer price index (CPI), a main inflation gauge, would average around 3 percent over the second half of the year if there are no emergencies or unusual situations, the National Development and Reform Commission (NDRC) also said Friday in a statement on its website.

  The CPI moderated to 2.9 percent in June from 3.1 percent in May, the National Bureau of Statistics (NBS) said Thursday. The CPI reached 2.6 percent for the first half of the year.

  The producer price index (PPI), an inflation gauge that tends to lead the CPI, dropped to 6.4 percent in June from 7.1 percent in May, according to the NBS.

  Economists' opinions were in line with official statements, showing confidence about hitting the 3 percent target.

  The CPI is likely to peak around July due to a rise in prices of foods and rent, given the im-pact of the floods in June. But last month's weaker-than-expected reading in both CPI and PPI helped allay worries about inflation and the 3 percent annual target looks achievable, said Sun Chi, an economist with Nomura Securities in Hong Kong.

  The fall in CPI and PPI inflation is mainly attributed to a slowdown seen in economic growth, economists Song Yu and Qiao Hong with Goldman Sachs also said in a note Thursday. "We expect there to be no persistent inflationary pressures going forward until growth rebounds."

Source: Global Times


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