Economy

China may face more inflation pressure in 2011: Analyst

(Xinhua)
Updated: 2010-11-11 10:04

BEIJING -- China was expected to face more inflation pressure in 2011 because of rising costs of food, raw materials and labor, said Sheng Hongqing, analyst with the China Everbright Bank.

Sheng expected the growth in China's consumer price index (CPI), a main gauge of inflation, to average 3.23 percent in 2011.

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The country's CPI rose to a 23-month high of 3.6 percent in September this year from a year earlier. The National Bureau of Statistics is scheduled to release the October data Thursday.

To encourage farmers to produce more grain, the Chinese government has been raising the state purchasing prices of grain for several years, which was a cause of the rising food costs, Sheng said.

Food prices account for one third in the basket of goods used to calculate the CPI.

Meanwhile, rising labor costs amid the government's efforts to lift incomes and improve people's livelihoods, and continuous price increases in the global commodity markets would all contribute to higher CPI growth next year, he said.

Further, he noted that the new round of quantitative easing imposed by the United States would result in hot money inflows to emerging economies, especially China, exacerbating inflation problems there.