CHINA’S consumer inflation, after easing for four consecutive months, will likely rebound in August and climb back above 3 percent in the fourth quarter, an economist with a government think tank said Thursday.
The rebound in inflation will also limit the central bank’s maneuvering room in using interest rate cuts to boost the economy, said Zhu Baoliang, vice director and chief economist of the economic forecast department of the State Information Center.
“It seems that price pressures are not huge now, but I think July was a turning point for consumer inflation,” said Zhu, whose think tank is affiliated with the powerful State planning agency, the National Development and Reform Commission.
Inflation pressures stem from rises in global agricultural prices, which in turn will push up pork prices, he said, adding that crop pests would pose a threat to China’s autumn harvest.
Zhu expects the consumer price index to climb 1.8-2 percent in August from a year earlier, against July’s 1.8 percent, though that would still be below June’s 2.2 percent. The National Bureau of Statistics is scheduled to release the consumer price index data Sept. 9.
Due to the likely rebound in inflation, “there isn’t much room for cuts in benchmark interest rates,” the economist said.
He said he expects at most one more interest rate cut over the rest of this year and that depends on the trend for the consumer price index.
China’s central bank has cut interest rates twice this year, moving aggressively with two reductions in less than a month. The first rate cut took effect June 8, and the second July 6.
(SD-Agencies)
|