Analysts say the consumer price index (CPI) may break 5 percent in July, which would increase the likelihood of tightening measures being introduced in the second half of this year.

 

The CPI for July, which will be released on Monday, may hover around 5 percent, according to the latest forecast from Deutsche Bank (Hong Kong). The bank said it may be 4.8 percent in the third quarter before it drops to around 4 percent in the fourth.

 

The trend is in line with many analysts' predictions that efforts to stabilize price rises will take effect later.

 

The CPI for the whole year will be around 3.8 percent, according to the Deutsche Bank forecast.

 

Morgan Stanley (Asia-Pacific) said the CPI could reach as high as 5.5 percent in July, while Goldman Sachs said the figure may hit 5.1 percent.

 

Whatever the figure, the forecasts point to rising prices in a country where economic growth soared to 11.5 percent in the first half of this year.

 

"The authorities are set to take measures in the coming months," said Zhuang Jian, a senior economist with the Asian Development Bank in China.

 

Apart from increasing supply, the central government has told local officials to stabilize prices.

 

(China Daily August 10, 2007)