China will face rising inflation pressure in 2007, with the consumer price index (CPI) expected to break two percent and possibly reach 2.5 percent, according to Xinhua's economic analysts.

Local residents buy fruits at a supermarket in Zhengzhou, Central China's Henan Province, December 6, 2006. China will face rising inflation pressure in 2007, with the consumer price index (CPI) expected to break two percent and possibly reach 2.5 percent, according to Xinhua's economic analysts. [newsphoto]

The Xinhua Economic Analysis Report released Monday quoted increased prices for oil products, raw materials and grains as major factors that are likely to cause overall price hikes in 2007.

Xinhua Economic Analysis Reports are regularly written by a team of more than 80 economic analysts under Xinhua's Economic Information Department. Their latest reports reviewed the country's 10 key indices in the economic and financial sectors and made projections on possible changes in the coming year.

In the first 11 months of 2006, China's CPI rose 1.3 percent over the same 2005 period, but in November it rose 1.9 percent compared to the same month in the previous year, the highest monthly rise of the year.

The report said considering the comparatively fast rise in food prices in December, and that food is a major component of the CPI, the December's numbers are expected to show another rise and push the CPI for the year to 1.4 percent.

While maintaining a GDP growth rate of around 10 percent annually over the past number of years, China has controlled inflation at a fairly low level. The CPI in 2005 rose by 1.8 percent.

(For more biz stories, please visit Industry Updates)