China official sees CPI easing but to watch producer prices

China's burst of consumer price inflation is likely to ease in the second half of 2008, but rises in producer prices still need close watching even as new policy responses are unlikely, a Chinese statistics official said.

A deputy commissioner of National Bureau of Statistics, Lin Xianyu, said consumer price inflation (CPI), which in February hit a near-12-year high of 8.7 percent, was likely to slow as government measures kick in to encourage more pork and other food production.

"I'd estimate that in the second half of the year CPI growth will ease," Lin said in an interview in the China Securities Journal on Friday, adding that officials would "strive" to keep to the government's full-year CPI target of 4.8 percent.

But policies to encourage more pork production -- a major factor pushing up consumer prices -- will take some time to have their full effect, Lin said. "Because it takes time to improve supplies, the indicators can't fall very quickly," he said.

Lin stressed that officials would closely watch producer price inflation (PPI), which recently reached its fastest rate in more than three years when annual PPI rose to 6.6 percent in February from 6.1 percent in January.

"Although this PPI was not at a very serious level, it must also be given attention," Lin said.

"Now all the response measures have basically been applied, and for the time being there won't be many new measures," Lin said. "The key is still implementing the government's various control demands, above all increasing supply."