Annual consumer price index (CPI) growth may stop at 4 percent this year when measures to stabilize food prices kick in, according to a bureau of statistics official.
The government has taken a series of initiatives, such as subsidizing farmers to raise pigs, to increase the supply of food, and ease price rises.
The measures are expected to take effect in the coming months, Yao Jingyuan, chief economist at the National Bureau of Statistics (NBS), was quoted by Xinhua News Agency as saying.
China has sufficient supplies of all food except pork, and overall supply outweighs demand, Yao said.
The CPI rose by a 33-month high of 4.4 percent in June, driven mainly by increasing food prices, which account for roughly one-third of the CPI basket.
Economists expect the figure to go higher in the third quarter, putting more pressure on policymakers.
The National Development and Reform Commission said yesterday it will take a tough stance to stabilize prices, punishing businesses that "illegally raise prices".
It said it will order its local branches to conduct nationwide inspections to prevent price cartels by food companies.
"Food price rises are spreading across the industry," said Li Zhikun with China Jianyin Investment Securities. Manufacturers of instant noodles, for example, announced last month they would raise prices.
The central bank initially set a target of 3 percent for annual CPI growth. Its research department revised this figure to 3.2 percent in June.
Li said he expects the CPI to increase in the range of 4.4 to 4.6 percent in the third quarter.
Analysts are warning that price rises may continue into the third quarter. This would mean Yao's forecast could be off the mark.
Source: China Daily
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