China's CPI may grow to 6.2% in Q3

(Shanghai Daily)

08:21, August 17, 2011

CHINA'S inflation may accelerate to 6.2 percent in the third quarter, up from 5.7 percent in the second quarter, even as economic growth is predicted to ease to its slowest in two years, a government report said yesterday.

"The inflationary pressure will remain high," said the State Information Center, a unit under the National Development and Reform Commission. "Soaring prices will curtail economic growth and China has to maintain tightening measures to tame inflation.''

The Consumer Price Index, the main gauge of inflation, soared to a 37-month high of 6.5 percent in July. The growth in CPI was boosted by 14.8-percent jump in food costs, with pork prices surging 56.7 percent from a year earlier.

Although the center's report said food prices may decline due to government efforts to boost supply, "risks of imported inflation are rising as the United States may further relax its monetary policies."

Last week, a statement by the NDRC, the country's top economic planning agency, said inflation in China may have peaked in July but the US may unveil another round of monetary stimulus measures, which is likely to trigger new inflationary risks to the country.

The US is eying a third round of quantitative easing, or printing money, to repay debt and bolster economic growth but this move may push up prices of commodities globally and increase pressure of imported inflation. It may also trigger an influx of speculative money into China and make it more difficult for the government to curb price rises.

The center's report said Chinese policymakers must make taming inflation a top priority.

China's economy may ease to 9.2 percent after growing 9.5 percent from a year ago in the second quarter, down from 9.7 percent in the first quarter and 10.3 percent last year.

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