2010-10-28 16:22

Inflation is still a concern after the People's Bank of China (PBOC), the central bank, raised its one-year benchmark deposit rate by 0.25 percentage points, Beijing News reported on Thursday.

According to an analysis released by the PBOC, income reform plans, price reforms of certain resources, and the rising cost of food and international commodities, will all add more pressure to the cost of goods and services in China.

China's consumer price index (CPI) in September increased 3.6 percent year-on-year and the effective interest rate has been below zero for eight successive months, the report said.

Analysts estimated that China's CPI will hit a summit in the first quarter next year, and the PBOC is likely to raise the interest rate again if the index continues to grow, according to the report.

The PBOC also estimated that grain prices will go up next year despite the good harvest. The increasing cost of grain and its increasing use in a number of growing industries in China, mean this will likely only push inflation higher, according to the Beijing News.

But inflation will remain in a controllable range, according to the PBOC.

The PBOC also said that although it is unlikely that the world economy will go through a double dip recession, the pace of recovery is slowing down.