China's CPI expected to hit 3.2% in 2010

BEIJING - China's consumer price index (CPI), a major gauge of inflation, is expected to rise 3.2 percent in 2010, a leading government think tank reported on Tuesday.

"The inflationary pressure is building up and excess liquidity would be the major factor driving the CPI up in the next several years," according to the 2011 Economic Blue Paper from the Chinese Academy of Social Sciences (CASS).

Official data showed that the CPI in October rose to a 25-month high of 4.4 percent from one year earlier, and the reading increased three percent year-on-year for the first ten months, hitting the government's target ceiling for the year.

Surging grain prices in the international market and the rising cost of growing grains in China would keep the prices of consumer goods at a relatively high level, said the report.

The CASS also forecast further increases in the prices of industrial goods.

"Imported commodities have been serving as the key factor driving up the prices of industrial goods in China, and pricing reforms of energy products, rising environmental costs and employees' wages have also contributed to the rising price increases," said the report.

The prominent task for the government's macroeconomic controls in the next two years is to stabilize economic growth and manage inflationary expectations, noted the CASS.

"If the growth speed is not controlled properly, the economy might grow at a rate of more than 10 percent, which would result in overheating and add pressure to economic growth in 2011," said the CASS.

source:Xinhua