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August 22, 2011

CHINA: Inflation in China set to fall

Inflation in China is expected to fall thanks to an increased output of vegetables, grain and rice, combined with the falling price of pork.

Inflation in China is expected to fall thanks to an increased output of vegetables, grain and rice, combined with the falling price of pork.

At a conference on China’s macroeconomic conditions in Singapore, a prominent economist said that the consumer price index (CPI) in China hit 6.5% in July, a likely peak that he said will “fall quickly”.

Zhang Liqun, an economist from Chinese government-run Development Research Center, said he expected the inflation pressure resulting from surging food prices to start easing as supply increases.

He said: “Generally speaking, the food supply situation has been improving, whereas demand is basically stable.”

Grain and rice output in China has been growing steadily in the last eight years and the production capacity of vegetables has also increased.

Zhang also said that the price of pork is expected to stabilise in September and October as supply and demand begin to match each other.

The pork price started to surge in the second half of 2010, encouraging farmers to increase their stock.

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