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China to brace for new inflationary pressure


08:59, December 11, 2012

BEIJING, Dec. 10 (Xinhua) -- The growth of consumer prices is expected to accelerate next year due to a widely anticipated economic rebound and global loose liquidity conditions, according to forecasts from economists and financial institutions.

Consumer prices are likely to enter a new upward cycle next year, although the increases will be moderate, said Hu Chi, a researcher at the State-owned Assets Supervision and Administration Commission's research center.

Official data showed Sunday that the consumer price index (CPI), a main gauge of inflation in China, grew 2 percent from a year earlier in November, up from 1.7 percent in October and 1.9 percent in September, because of higher food prices.

The researcher said the government should not relax controls over inflation because price growth will gain traction as the economy picks up.

Ample market liquidity resulting from easing measures adopted both at home and abroad will also push prices up, according to Yi Xianrong, a finance researcher at the Academy of Social Sciences.

The CPI's increasing growth reversed a general downward trend that has taken shape since July last year. Inflation at that time hit a 37-month high of 6.5 percent due to the effects of government stimulus measures introduced to cope with the 2008 crisis.

A Bank of Communications report said the bank expects slightly higher inflation rates next year. The report said the CPI will grow 2.4 percent year on year in the first quarter of next year, higher than that recorded in the last quarter of the year.

To buoy the economy, China's central bank has cut interest rates and banks' reserve requirement ratios twice this year.

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