China's gross domestic product growth will slow in 2006 to 8.8 percent from 9.4 percent this year, according to forecasts by the research arm of the central bank published on Friday.
In a report published in the official Financial News newspaper, the Research Bureau of the People's Bank of China forecast consumer price inflation of about 2.0 percent in 2006, up from 1.8 percent this year.
The research body said its forecasts did not represent the official forecasts of the bank.
The bureau said that the risk of a rebound in investment, rising pressure on the prices of natural resources and higher prices for services all served to stoke inflation.
A pick-up in investment would be due in part to efforts to improve infrastructure in rural areas and a programme to develop western and central regions, it said.
Loosening of government control over prices for energy and utilities could also contribute to increases in the CPI, it said.
But the report said that in the longer term, consumer price inflation was on a clearly falling trend because of dropping grain prices and industrial over capacity combined with inadequate domestic demand.
It added that the prices of durable consumer goods could fall in 2006, further contributing to a drop in inflation.