Inflation Continues to Drop in July     

The growth of China's consumer price index (CPI) fell to 6.3% in July year-on-year, 10-months low since October 2007, down from 7.1% in June, 7.7% in May and 8.5% in April as foods prices saw a deceleration rise this July.
    "A higher base in last July should be also an important factor for the lower inflation figure this July", analysts said, "as prices began to rise rapidly in the second half of 2007."
    "The government's measures in stabilizing food prices are effective," said an economist.
    Many insiders forecast the CPI growth should slow further over the rest of the year if no accident happens in China. What is more, someone hopes see inflation falling to below 6% in the fourth quarter.
    The National Bureau of Statistics of China released a report on August 13th that the inflation target should be raised to ranging 5% - 7% for 2009 and 2010 to maintain stable and rapid economic growth.
    The government aims to limit inflation to 4.8% in 2008. The Bank of China predicted early June that CPI for 2008 would increase 6.8% year-on-year.
    The government had released this July that it would focus on curbing inflation while trying to maintain a stable and fast economic growth.
   China has raised the export rebates for textile and clothes to ease the pressure on exports.
   "The falling CPI growth could mean an additional increase in fuel prices after the Olympic Games because the government controls fuel prices to curb inflation," according to a market observer.
    PPI (producer price index), a leading indicator for CPI, has jumped to a 12-year high, being 10% in July. "The soaring PPI is driven by surging energy prices and raw material price rise as well as increased production cost," some researchers commented, "Chemical players would face operational pressure this year."