Inflation to ease, but overall picture not optimistic

0 Comment(s)Print E-mail Xinhua, September 8, 2011
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China's consumer price growth is expected to slow down in the following months, but the overall inflation picture allows no optimism, an expert said on Wednesday.

Soaring food prices remain a driving force of the steadily-rising prices, in addition to imported inflation due to the U.S. quantitative easing policy and domestic monetary expansion, said Yao Jingyuan, former chief economist with the National Bureau of Statistics (NBS).

The underlying reason behind the soaring food prices is the weak foundation of China's agriculture industry, as more than half of the total population produces an agricultural output taking up less than ten percent of the nation's GDP, Yao said at a forum during the 15th China International Fair for Investment and Trade (CIFIT), which opened Wednesday in the southeastern coastal city of Xiamen.

He noted rising costs of fertilizer and labor also contributed to the price hike and said it will be a long-term trend.

Despite the pressure, Yao said price increases will ease in the following months, as the government's cooling measures will gradually yield results. The stable output of grain and industrial products provides a foundation for price regulation, he said.

China's Consumer Price Index (CPI) hit 6.5 percent in July. Analysts expect the figure will stay above six percent in August.

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