China Watch Blog

China’s top economic planner Saturday forecast a “mild” year-on-year rise in the consumer price index (CPI), a main gauge of inflation, in June, resulting in an average CPI increase of around 2.6 percent in the first half,  Xinhua reported.

The projection by the National Development and Reform Commission (NDRC) came one day after China released its latest economic data.

The latest estimate was revised up from a 2.5% CPI rise the NDRC projected on May 18.

China’s CPI hit a 19-month high with a 3.1% year-on-year increase in May, surpassing the central government’s targeted 3 percent annual inflation limit.

During the January-May period, China’s CPI rose 2.5% year on year.

According to the NDRC’s projection posted on its website, China’s June CPI will dip slightly month on month, but still post a “mild year-on-year increase” due to the low comparison basis in the same month last year.

The NDRC said positive factors for basic price stability were on the increase, citing sharp falls in international commodities prices, the government’s macro control policies and a crack-down on farm produce speculation as well as a possible good grain harvest this summer.

Our sister blog – China All-Day Economy Watch Blog reports that China’s consumer price index (CPI), a main gauge of inflation, picked up faster in April by rising 2.8% year on year.

Apparently, the April figure was up 0.4 percentage point from 2.4% in March, Xinhua reported, citing the National Bureau of Statistics (NBS). The CPI dropped 1.5% in the same month last year.

For the first four months, China’s CPI rose 2.4% year on year. The producer price index (PPI), a major measure of inflation at the wholesale level, grew 6.8% year on year in April and was up 0.9 percentage point from March.

In April, consumer prices in China’s urban areas increased 2.7% and in rural regions by 3%. Food prices, which accounted for about a third of the weighting in calculating the CPI, gained 5.9% during the month.

China is targeting a rise in consumer prices of around 3% this year, according to a government work report delivered by Premier Wen Jiabao in March at the annual legislative session.

China’s CPI ended nine months of decline in November of 2009, when it rose 0.6 percentage point, as the nation’s economy rebounded strongly ever since.

A leading Chinese government think tank Thursday forecast the country’s 2010 economic growth would top the 8% target set by the central government by almost 2 percentage points, according to a Xinhua report. China Watch Blog quotes the Chinese Academy of Social Sciences (CASS) as forecasting that  China’s gross domestic product (GDP) would expand by 9.9% this year, 1.2 percentage points higher than last year’s growth rate. Its forecast is higher than the 9.6% economic growth predicted by the Asian Development Bank earlier this month. Fixed assets investment would rise 33.3% year on year in 2010, said a blue book on China’s 2010 economic prospects jointly released by the CASS and the Social Sciences Academic Press. Xinhua quoted the CASS as saying that a slim chance existed of serious inflation in China this year with the consumer price index (CPI), a main gauge of inflation, growing within a moderate range. The book also said the government should make economic policies more flexible and better targeted over the rest of the year, while mapping out plans to withdraw stimulus measures gradually within the next two years without jeopardizing economic growth. China’s GDP grew 11.9% year on year in the first quarter to 8.06 trillion yuan (US$1.19 trillion) and fixed assets investment rose 25.6% to 3.53 trillion yuan during the same period. The country’s CPI rose 2.4% year on year in March, below the government target limit of 3%.