China’s Premier Wen Jiabao said the country can cap full-year inflation at 5%, indicating that price gains will slow in the second half from the quickest pace since July 2008, Bloomberg reported. Speaking in London during his visit to Europe, Wen added the country would struggle to reach its full-year inflation target of 4% but that the government is confident about subduing inflation, which accelerated to 5.5% in May. “Inflation may start to soften after June, and in the fourth quarter the rate is likely to drop below 5%,” said Li Cui, an economist at Royal Bank of Scotland (RBS.LSE) in Hong Kong. “For the annual average to come below 5% is more challenging.” Other analysts predict that inflation may reach 6.5% this month. Wen emphasized that rising prices and corruption can have an “impact on the stability of political power and the peacefulness of a society.”
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