Wang Xiaoguang, a researcher with the Macro-economic Research Academy affiliated to the NDRC, said that supply of most products surpasses demand and there is little room for the CPI to pick up.

"There is no evidence that China is facing inflation," he said.

In a related development, the NDRC announced yesterday that government revenues for the first half of the year reached 2 trillion yuan (US$250 billion), or about 66 per cent of the figure for the whole of last year.

The figure was 360 billion yuan (US$45 billion) more than the same period last year, said spokesman Han, attributing it to fast economic growth and improved industrial efficiency.

The NDRC warned local governments not to get carried away by increased revenues and splurge on wasteful projects.