Monday, July 9, 2012 - 04:48

China NDRC Offl: 2012 CPI To Below 4%, Small Risk Deflation

BEIJING (MNI) - China's consumer price inflation will stay below 4% for 2012, a senior official with the powerful National Development and Reform Commission told state television, playing down worries about deflation.

Headline consumer inflation rose at the slowest pace since January 2010 at 2.2% y/y in June, lower than the expected 2.3% in a median survey by MNI. CPI rose 3.3% y/y in the first half of the year.

Zhou Wangjun, deputy chief of the NDRC's price department, said the CPI, though falling fast in June, has not exceeded expectations.

He forecast that CPI in the second half would stay around 2% and would be below 4% for the full year.

The performance of producer prices was even more dramatic, with the producer price index falling 2.1% y/y versus the expected 2.0% decline. The June figure was the highest rate of deflation since November 2009 and fueled concerns about deflation.

"The likelihood for deflation in China is very small," Zhou said, adding that the government is studying measures to stabilize prices of small agricultural products, such as garlic and ginger. ** MNI Beijing Newsroom +86-10 8532 5998**

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