Rebound in inflation expected this year

China is expected to see a rebound in inflation this year, experts and insiders told the Global Times Tuesday.

According to data released by the National Bureau of Statistics (NBS), the consumer price index (CPI), a main gauge of inflation, rose 2.6 percent year-on-year in 2012, and it slowed to 2 percent in January.

"But we forecast that this year China will experience a new round of inflation, with the CPI staying at more than 3 percent," Lu Ting, a Hong Kong-based economist at Bank of America-Merrill Lynch, told the Global Times Tuesday, noting that the economic recovery will push a rise in prices of raw materials.

China's economic growth reached 7.8 percent for 2012, the slowest pace since 1999. But Ma Jiantang, head of the NBS, said earlier this year that he expected the economic rebound that began in the fourth quarter of 2012 would extend throughout 2013.

The World Bank also raised its forecast for China's 2013 economic growth to 8.4 percent, thanks to the government's fiscal stimulus plans and investment projects.

"Rising salaries will be another factor behind the expected rebound in inflation," said Lu, noting that food prices are likely to rise as well, which will also push up the CPI.

Moreover, effective from Monday, the National Development and Reform Commission (NDRC) hiked the retail prices of gasoline by 300 yuan ($48) per ton and diesel by 290 yuan per ton, although crude oil prices have recently dropped in the international market.

Analysts expect that the fuel surcharge fees for domestic flights will also be raised by 10 yuan next month.

"Those price increases will surely add to inflationary pressure in China," Wang Xianqing, director of the Research Institute of the Circulation Economy at Guangdong University of Business Studies, told the Global Times Tuesday.

Wang also said the central government should change its fuel pricing mechanism, noting that on the same day the NDRC raised fuel prices, Taiwan decided to cut its fuel prices.

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