A Chinese government think-tank has warned inflationary pressures are building in the economy and consumer prices will remain 'relatively high' in 2011, amid growing expectations of a rate hike.
The Chinese Academy of Social Sciences also cautioned that the world's second-largest economy was at risk of overheating next year 'if the growth speed is not controlled properly'.
The CASS report came as Beijing brought forward the release of key economic data for November to Saturday from Monday, fuelling speculation that policymakers were planning to raise interest rates in the coming days.
The think-tank forecast consumer prices to rise 3.2% over the entire year of 2010 - above the government's full-year target for 3% - and 3.3% next year.
'Surging grain prices in the international market and the rising cost of growing grains in China would keep the prices of consumer goods at a relatively high level,' the report said. Prices for manufactured goods were also expected to rise next year.
China last week pledged to shift its monetary policy stance to 'prudent' from 'relatively loose' next year, signalling new interest rate hikes were on the way.
The announcement came amid growing fears among officials and consumers over rising prices and soaring food costs. China's consumer price index rose 4.4% year-on-year in October - the fastest pace in over two years - with the prices of 18 types of vegetable increasing more than 60%.
Ever fearful of inflation's historical potential to spark unrest in China, Beijing has ordered a range of steps to ensure adequate supplies of key goods and offer financial help to the most needy.
The central bank last month ordered banks to raise the amount of money they must keep in reserve for the fifth time this year, after it announced in October the first interest rates hike in nearly three years.
CASS also forecast that the Chinese economy will grow by 9.9% this year before accelerating to around 10% in 2011 'with effective macroeconomic controls'. 'If the growth speed is not controlled properly, the economy might grow at a rate of more than 10%, which would result in overheating and add pressure to economic growth in 2011,' the report said.
The think-tank's economic growth forecast for 2011 is higher than that of the World Bank, which expects growth to slow to 8.7% next year from an expected 10% this year.
