Economists expect higher inflation in May

By Wang Yanlin | June 5, 2014, Thursday |

Online Edition

CHINA'S inflation may rebound in May while trade is likely to continue to recover, both signs of a stabilizing economy, analysts said before the data are released next week.

"May's data will show a modest improvement," said Wang Tao, an economist at UBS. "Exports have likely rebounded further, and fixed-asset investment growth probably stabilized as mini-stimulus offset weaker property investment."

Inflation may edge up after food prices stopped falling, Wang said, adding the Consumer Price Index may have risen 2.3 percent year on year.

Lian Ping, chief economist at Bank of Communications, predicted inflation at 2.6 percent for May. It compared with April's 1.8 percent gain.

"Pork costs have risen 21.3 percent on a monthly basis after the central government implemented a policy to control the supply of pork," Lian said. "Even with stable prices of other products, overall inflation is trending higher."

In the first four months, China's consumer prices expanded 2.2 percent from a year earlier, below the 3.5 percent limit set by the government for 2014.

Lian also said he expects to see exports and imports to continue the recovery started in April.

"Business and consumer sentiment in the United States and Europe have improved," Lian said. "New export orders also picked up, so underlying export growth has likely gained further strength in May."

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Economists expect higher inflation in May

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