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June CPI Likely to Hit Three Year High

by 5m Editor
5 July 2011, at 10:05am

CHINA - China's inflation is expected to reach a three-year high in June - possibly exceeding 6 per cent for the first time since August 2008 - driven by soaring food prices and living expenses, analysts said.

The country's consumer price index (CPI), a main gauge of inflation, is predicted to rise as high as 6.2 per cent in June, 0.7 per centage points higher than the figure in May, a China International Capital Corp Ltd (CICC) report said.

Other predictions from investment-bank economists are all above 6 per cent. The National Bureau of Statistics (NBS) plans to release the June figures on 15 July.

Inflation remains high although the economy continues to grow at a stable and relatively rapid pace, the People's Bank of China (PBOC), the country's central bank, said in its online statement on Monday.

The PBOC reiterated that it will continue to maintain a "prudent" monetary stance and will use multiple tools to effectively manage liquidity and tame inflation.

"Economic and financial development still face complicated challenges," it said, adding that there are still many risks ahead as the global economy recovers.

Food prices, which account for about 30 per cent of the CPI basket, have been driven up mainly by the pork price, which rose 11.7 per cent in May and 11.5 per cent in April, contributing 63.6 per cent to the CPI, according to the NBS.

Data from the Ministry of Commerce showed that the price of pork had increased for 10 consecutive weeks by the end of June. The wholesale price of pork rose by 13.3 per cent in June, from 22.17 yuan ($3.43) to 24.68 yuan a kilogram.

The ministry's data also showed that seafood prices climbed 4.3 per cent month-on-month in June, and eggs by 3.2 per cent, keeping food prices the main cause of the nation's inflation.