China's CPI will probably fall below 2% in July
China's CPI will probably fall below 2% in July due to the base effect, giving authorities more room to beef up monetary supply to support economic growth. If no unexpected factors arise in the third quarter, the CPI may reach 2% during the July-to-September period.
Many economists even predicted that the CPI may drop to 1.7% in July from June's 2.2 percent, to reach its lowest level in 30 months.
Food prices, which account for nearly one-third to calculate China's CPI, may stay flat in July compared with June, as rain and flooding affected vegetable production in many places in a traditionally peak season of supply.
Meanwhile, Chinese central government has strengthened its monitoring of farm produce prices.
China's economy is to see a continued slowdown and the government will implement more economic stimulus in the future.
The continued low consumer price index (CPI), a main gauge of inflation, pushes the government to introduce more pro-growth measures, respondents thought.
In order to boost the currently fatigued economy, China's top leaders reaffirmed that they will underline stable economic growth and adhere to a proactive fiscal policy and prudent monetary policy to counter the current economic hardships.
The ongoing pace of economic growth is within expectations, but the external environment remains grim and poses difficulties and challenges.
Moreover, most of leading Chinese economists also expressed high confidence in an optimistic economic outlook in the second half of 2012.
A quarterly survey, conducted by the National Bureau of Statistics, showed that 72% of 78 leading economists expected higher than 8% growth this year supported by further economic policies.
The previous stimulus policies have shown their effects, the economic growth is expected to rebound gradually, but at a moderate pace.
To buoy the economy, China has adopted a train of growth-spurring measures, including lowering banks' reserve ratios and interest rates, subsidizing energy-saving household electrical appliances and speeding up approvals for major construction projects.