Fri, Feb 11, 2011 - Page 11 News List

China inflation may top 5%: media

AFP, SHANGHAI

China’s inflation could exceed 5 percent for the first two months of the year, a government economist has warned in comments published by state media yesterday.

The forecast by Ba Shusong (巴曙松) would mark an acceleration from December, when the country’s consumer price index rose 4.6 percent from a year earlier owing to soaring food costs and higher raw material prices.

Analysts have warned inflation will pick up last month and this month owing to increased demand ahead of the Lunar New Year holiday and extremely dry conditions across northern China, which have hit wheat and other crops.

To counter rising prices, the central bank is likely to use stronger tightening policies in the first half of the year, especially the first quarter, to curb bank -lending and limit inflation, Ba was cited as -saying in the Financial News, a central bank-controlled newspaper.

Ba is an economist with the Development Research Center, a think tank that reports to China’s State Council.

China is scheduled to release last month’s inflation data around Feb. 15.

Beijing has issued a stream of policies and orders to contain price rises, particularly inflation in food and housing costs, which has a history of sparking unrest in China.

The central bank on Tuesday raised interest rates for the third time in four months, as authorities fight to tame inflation. It has also raised the amount of money banks must keep in reserve a number of times over recent months.

So far the measures appear to have had a limited impact.

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