“…China’s inflation, which has been lingering near 12-year highs, is expected to ease in the second quarter but would remain high at 7.5 percent…”

Source: AFP

China’s inflation, which has been lingering near 12-year highs, is expected to ease in the second quarter but would remain high at 7.5 percent, a government think tank was quoted as saying on Tuesday.

Food prices, the key factor in a recent spike in inflation, will begin to moderate as policies to boost supply take effect, said the State Information Centre in a report published by the official China Securities Journal.

China’s inflation reached 8.0 percent in the first three months of the year. In February, it climbed to 8.7 percent, before easing slightly to 8.3 percent in March.

The centre said inflation remained the biggest threat to economic stability, but argued any further tightening of monetary policy should be held off in order to focus on implementing policies that have already been decided.

In addition, it said a freeze on price hikes of key consumer items imposed since January should stop as prices of those items were no longer rising, while some were even falling slightly.

Items covered by price controls — intended to contain inflation and keep basic necessities affordable for most families — include grain, edible oil, meat, milk and liquefied petroleum gas.

The report forecast that China’s economic growth would probably expand by 10.8 percent from March to June, up 0.2 percentage points from the first quarter.