China's CPI to recover from next month, PBOC official says

China's consumer inflation may further decline in July but is likely to gradually recover from August to a level close to 1 percent by the end of the year, said Liu Guoqiang, deputy governor of the People's Bank of China, the central bank.

Due to the time lag of demand recovery and the basis effect, China's year-on-year growth in consumer price index, a main gauge of inflation, may further ease in July, Liu said at a news conference on Friday.

But this should be a transitory phenomenon, as the CPI growth is expected to register a U-shaped recovery and reach a level close to 1 percent by the end of the year as the supply-demand gap further narrows as policy effects filter through, he said.

The country's price level has declined but there is no deflation as the economy and broad money supply, or M2, continues to rise, Liu said. "So, there is no deflation right now and there will not be deflationary risks in the second half of the year."