China inflation may top 6 percent in June

BEIJING: China's inflation rate may accelerate to more than 6 percent year-on-year in June, which could bring the full-year consumer price index for 2011 to as high as 5 percent, a government researcher said in remarks reported on Sunday. Zhang Zhuoyuan, an economist at the Chinese Academy of Social Sciences, a top government think tank in Beijing, said taming inflation would remain the priority in coming months. He called for faster steps to push real interest rates into positive territory and douse price pressures.

The People's Bank of China has raised interest rates twice in 2011 and many analysts believe it may raise them again soon in an effort to control inflation.

"It will be very difficult for China to cap its annual inflation within 4 percent and the full-year CPI is likely to reach 5 percent," Zhang was quoted as saying by the state radio.

Beijing has set an annual inflation ceiling at 4 percent this year, but prices keep rising stubbornly and many economists have said it will be tough to achieve the goal.

Zhang said his inflation forecast for June also reflected the relatively low ase of comparison of a year earlier.

He attributed the persistent inflationary pressure mainly to an excessive supply of money and credit over a long time, when Beijing rolled out a massive stimulus plan to shield the economy from the financial crisis.

The increases of other input costs for enterprises, such as rising prices of labour and raw materials, will also make this round of inflation last for a while, he added.

According to a Reuters poll of 22 economists, China's consumer price index (CPI) in May may have accelerated to 5.4 percent from 5.3 percent in April.

The National Bureau of Statistics is scheduled to publish monthly economic indicators, including the consumer price index, for May on June 14.

Copyright Reuters, 2011