CPI increase likely to slow down in June

An upcoming release of official economic data is likely to show that the consumer price index (CPI), the main gauge of inflation, might moderate to a growth between 2.3 and 2.4 percent in June, down from 2.5 percent in May, economists predicted.

A median forecast by Bank of Communications (BOCOM) on Monday said the CPI probably grew 2.4 percent in June.

Tang Jianwei, an analyst at BOCOM said food prices, which account for around one-third of the weighting in CPI calculation, were generally stable in June, and prices of vegetables, meat and sea products began dipping in the second half of June.

The forecast is the same as one made by Agricultural Bank of China (ABC). ABC economist Fan Junlin also said inflation probably grew by 2.3 percent in the first half of 2014.

Government data on June inflation as well as the producer price index is due on Wednesday.

Economists predict that inflation will continue with a tempered growth rate in the second half of the year. Whole-year inflation is expected to stay within 2.5 percent.

Given that inflation remains under control, analysts said this will leave room for the government to further ease monetary policy in the coming months.

"I think macroeconomic policies will be further relaxed in the second half of the year. Fiscal policies will be made more active with an eye on boosting growth as well as restructuring," said Zhou Jingtong, a senior analyst at Bank of China.

Zhou also predicted that central bank policies will become more flexible and targeted, and it might also expand cuts in reserve requirement ratios for certain banks.