Inflation perception control should be more forward looking

0 CommentsPrint E-mail Xinhua, December 13, 2009
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China should take more forward looking and preemptive measures to fight inflation expectations following this year's credit boom and runaway property prices, said a report released by a leading Chinese bank.

Bank loans should be extended at a more reasonable pace with improved structures next year and policy fine-tuning is necessary, the Bank of Communications has said in a report released by its financial research center.

The government should maintain the continuity and stability of its monetary policy and meanwhile be more targeted and flexible, it said.

The report noted an over brisk equity and property market are always prelude of inflation. Money flow should be regulated to prevent asset bubbles.

It also suggested government increase supply of land resources and affordable housing and crack down on land enclosure to curb skyrocketing property prices which gained the most in 14 months in November.

CPI, the main gauge of inflation, jumped 0.6 percent in November from a year ago, the first monthly growth since January, because of lower statistical bases and rising food prices.

The producer price index (PPI), a major measure of inflation at the wholesale level, declined 2.1 percent in November from a year earlier.

The report expected PPI to end monthly drop in December, and the annual CPI decline to narrow to 0.8 percent.

Hyperinflation is unlikely and CPI is predicted to rise four percent next year, it said.

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