Think tank: China should raise inflation target to 4%

The Chinese Academy of Social Sciences said China should consider raising its annual inflation target to 4% from 3%, Reuters reported, citing Shanghai Security News. The influential Chinese think tank said that lifting the consumer price index (CPI) target to 4% would give the central bank more room to deal with excess liquidity and improve income distribution. The report also cited Zhang Hanya, an official at the National Development and Reform Commission (NDRC), as saying China’s growth must by accompanied by higher inflation. For instance, raising the prices of agricultural products, which currently lag international levels, may help boost farmer incomes. Though some analysts say China is on track to meet its 3% inflation goal for the year, the CPI has been trending higher in recent months, with consumer prices in August up 3.5% year-on-year.