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Rising food prices are expected to push up overall consumer prices in China. Economists are estimating growth of the nation's consumer price index for July, which is a main gauge of inflation, will stand above the 3 percent alert level.
The Consumer Price Index, or CPI, is a measure estimating the average price of consumer goods and services purchased by households. The percent change in the CPI is a measure in gauging inflation. Food prices account for about one-third of the CPI, the largest proportion. So their fluctuation greatly affect the index.
Economists say the recent hike in food prices due to extreme weather are expected to bring the CPI growth for July to above the 3 percent alert level.
Wang Yuanhong, Senior Economist of State Information Center said "Food prices will rise 7 percent in July. This will help drive up the CPI growth rate by more than 2 percent. The increasing cost of rent nationwide are also expected to push up overall food prices. So in general, I think CPI growth for July will probably exceed 3 percent."
There are also lingering uncertainties abroad, which are expected to have some impact on domestic prices.
Zhuang Jian, Senior Economist of Asian Development Bank said "The declining commodity prices have started to rebound, including steel and non-ferrous metal. This is partly because of the U.S. decision to maintain loose monetary policies. I think the rebound will also contribute to price rises at home."
Economists also regard the low basis last July as another reason for a high CPI growth for July.
China's CPI rose 2.6 percent from a year earlier in the first half of this year.