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August inflation rate tipped to rise, top 2%
By Wang Yanlin |
September 5, 2012, Wednesday
|
Print Edition
Print Edition
CHINA'S inflation rate may pick up again and bounce back to above 2 percent in August, analysts predicted yesterday ahead of the weekend release of the much-watched economic data for last month.
This may further complicate economic policy decisions and hold up the announcement of additional policies to support growth, analysts said.
The Consumer Price Index, the main gauge of inflation, may pick up pace to be between 1.9 percent and 2.1 percent, up from an 1.8 percent increase in July, some economists projected, based on the recent surge in corn and other food prices in the United States and international food markets.
Tang Jianwei, an analyst at Bank of Communications, said the CPI may even jump back to around 2.3 percent as food costs have risen quickly.
Data from the Ministry of Commerce showed vegetable prices in the first three weeks of August swelled 14.9 percent from a month earlier, and prices of meat, egg and edible oil were also experiencing a fast acceleration.
Tang added factors such as natural disasters in recent months also contributed to higher food costs, and domestic conditions like faster wage growth and loosening liquidity added to a rapid increase in inflationary pressure.
In a recent monetary policy report, the central bank said it expected inflationary pressure to pick up significantly after August.
Huang Yiping, a Barclays economist, said the rebounding inflation may complicate the already delayed process of launching more supportive policies.
"Given the complications, the top leadership may become more reluctant to introduce decisive measures to support growth," Huang said.
"The leaders will likely wait for the August data before making their next move."
The numbers for last month are likely to be as weak as those in July, if not worse, analysts said.
The Industrial Bank said in a report that it expects growth of industrial production to decelerate to 9 percent in August from 9.2 percent in July, and fixed-asset investment growth to contract to 20.3 percent from 20.4 percent a month earlier.
Lu Zhengwei, chief economist at Industrial Bank, said decision makers need to design "targeted" policies to address targeted problems in growth, to achieve a sustained effect and avoid resurgence of high inflation.
This may further complicate economic policy decisions and hold up the announcement of additional policies to support growth, analysts said.
The Consumer Price Index, the main gauge of inflation, may pick up pace to be between 1.9 percent and 2.1 percent, up from an 1.8 percent increase in July, some economists projected, based on the recent surge in corn and other food prices in the United States and international food markets.
Tang Jianwei, an analyst at Bank of Communications, said the CPI may even jump back to around 2.3 percent as food costs have risen quickly.
Data from the Ministry of Commerce showed vegetable prices in the first three weeks of August swelled 14.9 percent from a month earlier, and prices of meat, egg and edible oil were also experiencing a fast acceleration.
Tang added factors such as natural disasters in recent months also contributed to higher food costs, and domestic conditions like faster wage growth and loosening liquidity added to a rapid increase in inflationary pressure.
In a recent monetary policy report, the central bank said it expected inflationary pressure to pick up significantly after August.
Huang Yiping, a Barclays economist, said the rebounding inflation may complicate the already delayed process of launching more supportive policies.
"Given the complications, the top leadership may become more reluctant to introduce decisive measures to support growth," Huang said.
"The leaders will likely wait for the August data before making their next move."
The numbers for last month are likely to be as weak as those in July, if not worse, analysts said.
The Industrial Bank said in a report that it expects growth of industrial production to decelerate to 9 percent in August from 9.2 percent in July, and fixed-asset investment growth to contract to 20.3 percent from 20.4 percent a month earlier.
Lu Zhengwei, chief economist at Industrial Bank, said decision makers need to design "targeted" policies to address targeted problems in growth, to achieve a sustained effect and avoid resurgence of high inflation.
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