China is still facing huge inflationary pressure, in part because expectations of rising prices remain firmly entrenched, a statistics official was reported as saying on Monday.
The comments by Xie Hongguang, deputy head of the National Bureau of Statistics (NBS), underlined Beijing's concern that while consumer inflation has eased recently on the back of lower food prices, other factors could fuel a rebound soon enough.
"Inflationary pressures remain big because of oil and power pricing reform, continuous price increases for upstream products and high international prices for commodities," Xie said in a speech reported on the NBS website.
"Inflationary expectations still remain strong," he added. Xie's view echoed that expressed by Zhou Xiaochuan, China's central bank governor, at the weekend. Zhou predicted that Chinese inflation would ease slightly in the coming months as the country's food supply increased but that high commodity prices meant officials could not let their guard down.
China's consumer inflation was 7.7 percent in May, down from 8.5 percent in April but not far from the decade highs it has flirted with since late last year.
Looking at the broader economy, Xie said China was at an uncertain juncture, with risks of both acceleration and deceleration, requiring flexible policies. He did not elaborate on what he meant by flexible policies.
"On one hand, liquidity and money supply remain excessive and local governments are eager to speed up growth, so it is still possible for investment and credit growth to rebound," he said. "On the other hand, industrial output and export deliveries are slowing down sharply because of weaker external demand, so China's economic growth rate may drop further," he said.
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