Consumer inflation may peak in Q2: analysts
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Consumer inflation may peak in the second quarter of this year to 5.5 percent, fueled by higher food prices and a lower comparison basis, analysts said.
The Consumer Price Index (CPI), a main gauge of inflation, will rise to 5.5 percent in May from 5.3 percent in April, said Song Yu, an economist with Goldman Sachs. The May CPI is due for release on Tuesday.
Rising food prices, especially pork, aquatic products and eggs, are the primary drivers for the predicted increase, according to Song.
This view is shared by Fan Jianping, chief economist of the State Information Center, adding that the CPI is likely to decline in the second half of the year as the government continues its efforts to control prices.
Zhang Zhuoyuan, an economist with the Chinese Academy of Social Sciences, further predicted that the CPI would hit 6 percent in June driven by carryover effects and reach 5 percent for the entire year, exceeding the government's target ceiling of 4 percent.
He attributed the latest round of price hikes to the fast growing fixed assets investment and excessive credit supply rather than imported inflation. "This manifests too much money and liquidity on the market," he said.
The CPI hit a 32-month high of 5.4 percent in March. To curb the rising rate of inflation, the central bank has hiked its benchmark interest rates four times since last October and raised the required reserve ratio for commercial banks five times this year to a record high of 21 percent.
