China’s expects inflation to fall to 6.0-pct as commodity bubble bursts

SHANGHAI, August 14, 2008 (AFP) – China’s consumer inflation is expected to continue to slow in the rest of this year and in 2009 as global commodity prices ease, Chinese state media reported Thursday. China’s consumer price inflation fell to 6.3 percent in July, off from a nearly 12-year high of 8.7 percent hit in February and down from 7.1 percent in June.

The growth in the consumer price index (CPI) — the main gauge of inflation — is expected to be below six percent in 2009, the 21st Century Business Herald reported, citing He Keng, an official with China’s parliament.

He, vice director of the financial committee of the National People’s Congress, told the newspaper in an interview an economic slowdown, rather than inflation, should now be a bigger concern for Beijing.

“Crude oil prices are falling and I believe iron ore prices will also decline in the near future… CPI growth is likely to continue to decelerate,” He said.

“The risk of further economic slowdown, rather than increase of prices, deserves more attention,” he said.

China’s economy has slowed, growing 10.4 percent in the first half of the year compared with the 11.9 percent recorded for all of 2007.