September 5, 2011

China's consumer prices in August is projected to have slowed down for the first time in four months as food prices started to stabilise, analysts said Friday (Sep 2).

The consumer price index (CPI) had probably grown 6% last month, said major investment firm China International Capital Corp (CICC), adding that prices of meat and grain remained steady, while vegetable prices dropped.

China's consumer prices surged 6.5% on-year to a 36-month high in July, driven mostly by food prices, which jumped 14.8% from a year earlier. The figure was far above the Chinese government's yearly target of 4% for 2011.

Many analysts also expected that China will likely contain its annual inflation within the 5% range.

In the first seven months of this year, the CPI increased to 5.5% from a year earlier, despite the country's tightening moves.

The CPI growth will slowly cool down from the third quarter, as pork prices are starting to stabilise, experts said. Pork is the most widely consumed and affordable meat in China.

An inflation cycle and a pork prices cycle have been showing a similar pattern since 2006, analysts said.

Liu Shijin, deputy director of the Development Research Centre of China's cabinet State Council, estimated the CPI will grow a little above 5% overall for 2011, as inflation growth peaked in July.