Mainland inflation hit a 37-month high of 6.5 per cent last month, but experts suggest it may be a peak, saying the government's tightening policies are taking hold and market turmoil is pointing to slower global growth and lower commodity prices.
The consumer price index (CPI) last month increased 6.5 per cent from a year earlier and 0.5 per cent from June, the National Bureau of Statistics said yesterday.
The rise, which edged up from a three-year-high of 6.4 per cent in June, was driven mainly by a 14.8 per cent gain in food prices, which count for roughly one-third of the index.
The producer price index (PPI) rose 7.5 per cent year on year last month, compared with the 7.1 per cent in June, but the month-on-month PPI was flat.
The CPI was slightly higher than expected, but economists forecast inflationary pressure could ease to 4 to 4.5 per cent by the end of this year. Some suggest there may be subtle changes in tightening policies.
HSBC economist Qu Hongbin expects prices to cool and the CPI to ease in the coming months, citing a continued slowing of money-supply growth, a more favourable 'base effect' from last year's CPI figures, softening commodity prices on the back of slower US and global growth, lower domestic demand and government measures designed to encourage food production.