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Experts: China's full-year inflation target still attainable
September-13-2010

China can achieve its inflation target this year through proper management of expectations during the final quarter, despite the August inflation rate quickening to a 22-month high, experts said.

The consumer price index (CPI), a major gauge of inflation, is expected to peak in September as prices of farm products rise, Fan Jianping, a senior economist with the State Information Center (SIC), said Sunday.

In August, prices of pork, vegetables and eggs increased 9 percent, 7.7 percent and 8.3 percent, respectively, month on month, according to the National Bureau of Statistics (NBS).

Apart from farm products, rising labor prices and natural resources costs will push the September CPI higher still to be the peak for the year, Fan said.

Since the prices hike of farm products in August were mainly caused by extreme weather conditions, natural disasters and speculation in several farm products instead of strong industrial demand, they are temporary, CITICS Securities analysts said.

The impact on grain harvests of the natural disasters that hit some Chinese regions this year are manageable, according to Fan Gang, director of the National Economic Research Institute.

The forthcoming autumn harvest, which accounts for about 70 percent of China's annual grain output, will directly influence the inflation figure as food prices have about a one-third weighting in the calculation of the CPI, said Fan Gang.

China's annual grain production has recorded increases for six consecutive years, which means there are ample reserves, Fan Gang said.

Adequate food supply will ease inflationary pressures given international food prices haven't seen large fluctuations despite Russia's ban on grain exports until the end of the year, he said.

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