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CPI growth may ease to 3.2 percent in May on fallback of food prices/XINHUA-File

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China likely to kick off macro control measures again

CPI growth may ease to 3.2 percent in May on fallback of food prices/XINHUA-File

BEIJING, Jun 4 – China is expected to kick off macroeconomic control measures again if its May major indicators scheduled to be released in succession this week remain sluggish.

Experts predict that if the figures are unpleasant, the central bank is likely to cut interest rates so as to stir up domestic demand.

Institutions forecast that the consumer price index (CPI) growth may continue to be eased to 3 percent to 3.2 percent in May on fallback of food prices.

China International Capital Corporation (CICC) expected the CPI rise to further decline to 3.1 percent year on year and the producer price index (PPI) to fall to negative 1.5 percent on year in May.

Lu Zhengwei, the chief economist of the Industrial Bank, predicted that PPI growth may remain moving in the negative band in May while the CPI is expected to rise by 3.2 percent on year.

According to Lu, fixed-asset investment growth in May is expected to slide down to below 20 percent. Retailing is likely to pick up moderately. Imports and exports increase may rebound in May but still stay below 10 percent. Industrial added value is predicted to bounce up but keep at single-digit growth.

The industrial added value is expected to rebound to 10.2 percent in May due to more working days as compared with the corresponding period of 2011, said CICC.

It also predicted that exports and imports growth is likely to recover a bit but remain at low level with the trade surplus expected to widen to $20 billion.The investment and consumption is expected to remain weak in May, with the increase falling back to 19.5 percent and 13.8 percent year on year respectively, said CICC.

Institutions also forecast that bank lending may continue weak in May on decreasing deposits and sluggish lending demand.

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CICC predicted that the new lending in May is expected to reach 650 billion yuan and M2, the broad money supply, is likely to dip below 12 percent on possible net decline of the position for foreign exchange purchase.


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