China Inflation Forecast to Hit 7% This Year


China's consumer inflation is expected to reach 7 percent in 2008, up from 4.8 percent last year, a government economist said in comments published on Monday.

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Fan Jianping, an economist with the State Information Centre, a think-tank under China's economic planning agency, said inflationary pressure in China was still growing and would remain the top concern for policy makers.

"Overall price pressures will be quite serious in 2008 and 2009, and it will be hard to get inflation back to the low levels of past years," Fan said in an opinion article in the official China Securities Journal.

"Inflation remains the biggest challenge to China's stable economic growth," he said.

Beijing is aiming to limit the increase in the consumer price index (CPI) to 4.8 percent, the same as last year, but officials and analysts alike have already said the target is likely to be missed this year.

The CPI rose 8.2 percent in the first four months from a year earlier. In April alone it was up 8.5 percent on the year.

But Fan said inflation was unlikely to climb into double digits because of a strong supply-side response and government controls on prices.

Fan said this month's devastating earthquake in Sichuan would not change China's economic fundamentals. As such, Beijing did not need to veer from its stance of a tighter monetary policy combined with fiscal prudence.