The June CPI inflation rate for China will be published officially on 18 July 2008. Bank of China reportedly estimates that the published rate would be between 7.1 and 7.4 per cent, thus further cementing a yearly 2008 inflation rate above 7 per cent. So says also the latest forecast of the Chinese Academy of Social Sciences (CASS), which published a report this month forecasting about 7 per cent for 2008.
Still, Zhou Xiaochuan, the governor of the PBC, mentioned at a conference of the Bank for International Settlements in Basel, Switzerland, that inflation is likely to fall in summer. For him, inflation would ease in summer because “we’ve got a good harvest, and some supply policies have started bearing results.” Having in mind that other global forces are driving up prices, such as energy and other commodities, this statement has to be treated with caution.
However, a stabilization of rates around 7 per cent would be a good first step. towards lower inflation rates. Following May, June would be the second month of below 8 per cent if current predictions hold. But the drop of the rate from 8.5 per cent in April to now 7.1 per cent should also be seen on the backdrop of the high inflation rate in June 2007. June was the first month that showed higher than 4 per cent inflation last year.
