China’s inflation rate will peak in August and then fall for the rest of the year, predicted Lian Ping, chief economist of the Bank of Communications (BoCom; 601988.SH, 3988.HK,) state media reported. "The CPI (consumer price index) is likely to surpass 3.3% in August but that will be the highest level for the year," he said, arguing that slowing growth and falling industrial goods prices would act as deflationary pressures. However, Lian added that long-term inflation still remains a threat, as rising food, labor, and natural resource prices could push the CPI back up in spring 2011. Economists have been keenly tracking China’s inflation rate, which was up 3.3% year-on-year in July, its highest level since October 2008.
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