CPI target well within reach, say economists

%3CFONT%20face%3DVerdana%3E%3CFONT%20face%3DVerdana%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EThough%20China%27s%20consumer%20inflation%20is%20likely%20to%20peak%20in%20the%20third%20quarter%20of%20this%20year%2C%20the%20effective%20administrative%20price-control%20measures%20and%20a%20more%20flexible%20yuan%20will%20help%20ease%20inflation%20pressures%2C%20economists%20said%20on%20Monday.%20%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EAt%20the%20same%20time%2C%20economists%20were%20not%20too%20sure%20on%20whether%20the%20Consumer%20Price%20Index%20%28CPI%29%2C%20a%20main%20gauge%20of%20inflation%2C%20would%20remain%20within%20the%203%20percent%20target%20set%20for%20the%20full%20year%20and%20how%20high%20the%20peak%20would%20be.%20%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EThe%20country%27s%20CPI%20is%20likely%20to%20peak%20in%20June%20or%20the%20third%20quarter%2C%20said%20Cao%20Yuanzheng%2C%20the%20chief%20economist%20of%20Bank%20of%20China%20International.%20%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3E%22The%20peak%20is%20also%20due%20to%20the%20low%20comparison%20basis%20over%20the%20same%20period%20of%20last%20year%2C%22%20Cao%20said.%20The%20CPI%20declined%201.7%20percent%20in%20June%202009%20and%201.8%20percent%20in%20July%202009%2C%20compared%20with%20the%20same%20periods%20of%202008.%20%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3ERising%20meat%20prices%20may%20be%20another%20contributor%20to%20the%20possible%20CPI%20surge%20in%20the%20third%20quarter%20of%20this%20year.%20Meat%20prices%20are%20expected%20to%20reach%20the%20highest%20level%20in%20the%20third%20quarter%20and%20edge%20up%20the%20CPI%20by%201%20to%201.5%20percentage%20points.%20That%20in%20turn%2C%20will%20see%20the%20CPI%20go%20past%20the%204%20percent%20mark%20in%20the%20third%20quarter%2C%20said%20Cao.%20%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EFood%20accounts%20for%20about%20a%20third%20of%20the%20weightage%20in%20the%20CPI.%20Prices%20of%20vegetables%20have%20become%20stable%20as%20the%20weather%20is%20getting%20warmer%20and%20the%20government%27s%20control%20of%20food%20prices%20is%20working.%20%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EThe%20rising%20producer%20price%20index%20%28PPI%29%20is%20yet%20to%20make%20an%20impact%20on%20CPI%20due%20to%20overcapacity%20problems.%20But%20the%20influence%20will%20become%20distinct%20as%20utilization%20improves.%20PPI%2C%20a%20major%20measure%20of%20inflation%20at%20the%20wholesale%20level%2C%20rose%207.1%20percent%20in%20May%20and%206.8%20percent%20in%20April%2C%20compared%20with%20a%20year%20ago.%20%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3ECao%20said%20annual%20inflation%20is%20likely%20to%20be%20controlled%20within%204%20percent%2C%20but%20it%20might%20cross%204%20percent%20in%20the%20second%20half.%20%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EDong%20Xian%27an%2C%20chief%20economist%20at%20Industrial%20Securities%2C%20said%20the%20peak%20would%20be%20at%20around%203.5%20percent%20before%20moving%20downhill.%20He%20expressed%20confidence%20that%20the%20annual%20CPI%20would%20be%20maintained%20at%20around%203%20percent.%20%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3E%22It%27s%20challenging%20to%20keep%20the%20CPI%20within%20the%20target%20scale%2C%22%20said%20Zhuang%20Jian%2C%20a%20senior%20economist%20with%20the%20Asian%20Development%20Bank.%20%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3ECosts%20of%20basic%20resources%20like%20water%2C%20electricity%20and%20natural%20gas%20are%20expected%20to%20rise%20in%20many%20regions%20during%20the%20second%20half.%20%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3ERecently%20about%2014%20Chinese%20provinces%20and%20cities%20have%20raised%20workers%27%20minimum%20wages%20and%20that%20will%20eventually%20increase%20the%20costs%20of%20consumer%20products%2C%20Zhuang%20said.%20%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EIt%20is%20also%20quite%20possible%20that%20the%20ADB%20may%20revise%20the%20nation%27s%20annual%20CPI%20forecast%20of%203.6%20percent%20as%20the%203-percent%20target%20looks%20possible%2C%20he%20said.%20%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3E%22The%20government%27s%20control%20of%20food%20prices%20by%20increasing%20supplies%20has%20been%20effective%20and%20it%20may%20adopt%20similar%20administrative%20measures%20%28in%20the%20second%20half%29%2C%22%20he%20said.%20%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EA%20more%20flexible%20yuan%20will%20also%20help%20alleviate%20%22imported%22%20inflation%20as%20imports%20would%20become%20cheaper%2C%20and%20thus%20help%20control%20inflation%2C%20the%20economists%20said.%26nbsp%3B%3CBR%3E%26nbsp%3B%3C/FONT%3E%3C/P%3E%3C/FONT%3E%3C/FONT%3E