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CPI growth may fall to 4% by year end |
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2011-7-27
BEIJING - China´s consumer prices will likely fall in the second half of the year, trimming growth of the consumer price index (CPI) to 4 percent by the year´s end, the Bank of Communications said in a report Thursday. The bank forecast the rise of CPI, the main gauge of inflation, would be controlled at around 5.2 percent from a year earlier this year. The report attributed the weakening inflation mainly to tighter liquidity, slower economic growth, lower international commodity prices and adequate grain supplies. However, "there is limited room for moderation in inflation this year and long-term pressure of price increases still exist," said the bank´s chief economist Lian Ping. China still faces imported inflation as crude oil prices will probably stay high as well as long-term pressure of price increases due to higher labor costs and material costs, he said. China´s inflation escalated to the highest level in three years in June with the CPI jumping 6.4 percent year on year, well above the government´s target of 4 percent for this year. CPI´s growth may ease to 3 percent in the middle of next year if no sudden factors emerge both at home and abroad, the report added. The report also predicted the country´s economy would expand by around 9.5 percent for the year, with little risk of a hard landing. China may lift banks´ reserve requirement ratio another once or twice this year, with 0.5 percentage points each, the report said, adding that chances of interest rates hikes would be slim. Foreign exchange reserves will hit $3.5 trillion by the end of the year, and the value of the yuan will appreciate by 5 percent against the US dollar this year, the report added. Housing prices will moderate but in a limited range, the report said.
Source:Xinhua
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