CPI predicted to rise 7.5 percent in January

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Jan. 18 – The Bank of China forecast a minimum 7.5 percent rise in the January Consumer Price Index (CPI), mainly fuelled by rising food prices and the worst winter weather in decades.

The bank said in a report issued Friday that the CPI would rise between 5 to 7 percent in the first half this year, and decelerate to 3-4 percent in the latter half. The yearly CPI increase for 2008 would stay at the same 4.8 percent as that of last year according to the report.

According to Xinhua, the bank predicts that the yearly GDP growth would be 10 percent in 2008, less than the 11.4 percent for 2007.

The report said that a rise in the price of grain helped push food prices up, driving the inflation index up. Grain prices in major wholesale markets rose 10 percent year-on-year in 2007, and the prices of soybean, corn and wheat jumped between 7.2 to 25 percent last year.

The worst winter weather in half of century helped to fuel inflation in the short term, though it is still doubtful that the storms will have a long-term effect on the national economy.

The central bank is likely to tighten monetary policies in a bid to curb inflation and stimulate domestic markets; one or two interest rate hikes are likely.