With the increased grain supply and stable prices, the consumer price index (CPI) growth in China will slow if there are no new external pressures, predicted China's central bank.

The third quarter report on monetary policies released Tuesday by the People's Bank of China (PBOC), the central bank, said that it expected the growth of the CPI for the year to be about 4.1 percent since the influence of grain prices growth still exist.

The bank said the increase of food prices has directly led to this round of CPI growth and the price hike of non-food items.

Influenced by price growth of energy and food, the price of non-food items rose 1.3 percent in September, the highest in recent years, the central bank said.

The pressure of inflation has not been eased and CPI has maintained rapid growth, jumped from 3.2 percent in January to 5.2 percent in September, the central bank.

In the first three quarters, CPI saw a year-on-year increase of 4.1 percent.

Meanwhile, the urban residents' predictions about inflation should also be addressed, the central bank said. According to bank's survey on urban depositors, 40.6 percent of those surveyed believed that price hike would continue in next quarter and only 6.7 percent predicted a price drop.

The central bank predicted that in the fourth quarter of 2004 the nation's economy would continue to develop "towards the anticipated direction" under the state's macro-economic control policies.

The central bank said that the speed of economic growth would continue to steady, the growth rate of consumer price index would be stable and the national economy would maintain "steady growth."

Enthusiasm about investment expansion was still high in many areas and a rebound in fixed asset investment was possible, the bank warned.

Loans in fourth quarter would be higher than in 2003 and the new RMB loans and currency supply would near the expected target, it said.

Source: Xinhua