THIS year, the government may keep its inflation target unchanged at around 3 percent, sources say, suggesting policymakers will continue to roll out more economic support measures while avoiding aggressive stimulus.

Some analysts have speculated that China will raise the inflation target to 3.5 percent, which would give authorities more room to support the world’s second-largest economy.

But sources said the government expects surging food prices to start easing in the second half of the year, as the government takes steps to address pork shortages.

The inflation target is usually unveiled at the annual two sessions in early March.

“The target will still be around 3 percent,” one of the sources said. “We cannot rule out the possibility that inflation may break 5 percent in the coming months but that could be short-lived.”

China’s consumer price inflation (CPI) accelerated to a near eight-year high of 4.5 percent in November, as pork prices doubled due to an outbreak of African swine fever, but producer prices have remained in deflation for five straight months.

China has kept its inflation target at around 3 percent since 2015.

While food prices have spiked, there has been little sign of a pickup in inflation across the broader economy, suggesting demand remains sluggish. Core inflation – which excludes food and energy prices – has stayed largely subdued.

“Currently, the CPI rise is mainly due to pork prices – this is a structural, not a broad-spread, price rise. Pork prices could start to fall in the second half,” said a second source.

(SD-Agencies)