Dong Xian'an, chief economist at Industrial Securities, has warned China's July CPI figure may exceed 3 percent.

"The food supply shortfall due to this year's floods has lead to rising food prices. The food component of the CPI is expected to increase 7.4 percent year-on-year in July, while the CPI will be around 3.5 percent," Dong said.

China's consumer price index (CPI) has been rising this year. The prices of vegetables such as garlic, ginger and spring onion, have soared and the outlook for inflation is causing concern.

A report from Shenyin & Wanguo Securities Co., Ltd. (SWS) says the price of vegetables and pork rose sharply in July. It forecast 2010 CPI would peak in July.

Non-food prices are also likely to contribute to the increase in the CPI. Since 1995, apart from 2001 and 2003, the non-food component of the CPI has risen every year in July.

China's business press carried the story above on Friday. China.org.cn has not checked the stories and does not vouch for their accuracy.