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China's July inflation to exceed 6 pct: analysts

08-08-2011 16:15 BJT

BEIJING, Aug. 8 (Xinhua) -- Last month's inflation rate is expected to exceed 6 percent, driven by stubbornly high food prices, analysts said ahead of official data to be released on Tuesday.

July's Consumer Price Index (CPI), a main gauge of inflation, is likely to exceed June's three-year high of 6.4 percent, according to forecasts by several domestic securities firms.

The Shanghai-based Shenyin and Wanguo Securities estimated that the CPI grew by 6.7 percent last month, 0.3 percentage points higher than that of June, mainly due to rapidly rising food prices.

The company said prices for commodities and housing will still be the main focus of China's macroeconomic control policies.

China Industrial Bank Co., Ltd. (CIB) also said the index will grow by about 6.5 percent in July, adding that it may grow even more over the course of the year.

Lu Zhengwei, chief economist of financial markets at CIB, said it will be a "huge challenge" for China to bring its CPI back under 5 percent this year.

He said that he expects an interest rate hike in August, while the central bank's reserve requirement ratio will remain unchanged.

However, some analysts foresee a turning point coming in the months ahead.

Tang Jianwei, a senior macroeconomic analyst at the Bank of Communications, predicted that overall prices will begin to drop in the fourth quarter due to lower commodity prices, fading carryover effects and the possibility that the government's cooling measures will start having an effect.

The National Bureau of Statistics (NBS) is scheduled to release July's CPI and other major macroeconomic data on Tuesday.

Editor:Wang Xiaomei |Source: Xinhua

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