Yi Gang predicts inflation below 2pc

Central bank governor Yi Gang said he expects China’s annual average inflation to be below 2 percent this year, while cautioning against both inflationary and deflationary pressure amid economic and macro policy uncertainty, Reuters reports.

China will stick with implementing normal monetary policy, and will focus on the impact from structural changes on prices, Yi told a financial forum in Shanghai.

China will also actively use structural monetary policy tools to support green transformation of the economy, Yi said.

“There are still uncertainties with the overseas pandemic situation, economic recovery and macro policies, and we must not lower our guard regarding inflation and deflation pressures from all sides,” Yi said, Bloomberg reports.

Consumer inflation accelerated to 1.3 percent in May, government data showed Wednesday, below economists estimates of 1.6 percent.

Producer prices have been surging at a faster pace though, largely due to commodity prices, fueling concerns that inflation pressures could spread more broadly in the economy. So far, there’s little evidence of that happening as factories have been absorbing rising costs.

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