Liu Guoqiang, deputy governor of the People’s Bank of China (PBOC), made this prediction at a press conference in response to the country’s softening price growth in recent months.
In June, China’s CPI came in flat compared to last year’s period, and lower than the 0.2-percent increase in May, while the producer price index went down 5.4 percent.
The CPI may continue to decline in July due to a time lag in demand recovery and the base effect, but will gradually pick up from August thanks to reasonable and moderate monetary conditions, stable residents’ expectations, and a closing supply-demand gap, Liu said.
“We don’t see deflation at present and there will not be a deflationary risk in the second half of this year either,” Liu said.
The Chinese economy has recovered steadily, with M2 maintaining a relatively sound growth, which is obviously different from the typical deflation in history, Liu added.