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China's CPI to rise around 5% in Q2: Official

Source:   Time:

China's consumer price index (CPI), the main gauge of inflation, will rise between 4.9 and 5.1 percent year on year in the second quarter of 2011, an official with the National Development and Reform Commission (NDRC) said Sunday.

The CPI will rise to about 5 percent in the first half of the year and move slightly lower in the second, Xu Lianzhong, director with the NDRC's Analysis and Prediction Office said at the 5th China Derivatives Analyst Forum 2011 held in Hangzhou of southeast China's Zhejiang province.

Xu said China still faces grave inflationary pressures caused mainly by rising costs of production, which pushed up prices of foods, commodities and services, as well as carryover effects.

"The country has raised minimum grain purchase prices this year which will, in turn, keep the prices of meat, eggs and vegetables at high levels," he said.

Meanwhile, rising prices of labor and production, including fertilizers, diesel oil and seeds, will push up food prices, Xu said, adding that prices of high-processed foods might also pick up the upward trend.

"It is pretty tough for the country to keep 2011's whole year CPI growth under 4 percent," he said.

But he added that the country's CPI is unlikely to rise further, as it had already reached a high level.

China's CPI growth hit 5 percent in the first quarter of this year with the March CPI hitting 5.4 percent year on year, up from 4.9 percent in February.

To mop up excess liquidity, China's central bank has raised commercial banks' reserve requirement ratio four times and raised benchmark interest rates twice since the beginning of this year.

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