inflation

According to the recent stats the slowdown in China’s economy was less sharp than predicted and Beijing reports that corralling inflation remained its top priority even though a "complex and volatile" global economy clouded the outlook.

Wednesday China reported that second-quarter gross domestic product increased by 9.5% rate from the same period a year ago, outdoing the forecast 9.4% growth. However, it is still considered a slow pace since the Q3 of 2009.

According to an investment expert China is going to suffer recession irrespective of whether they cope with the inflation.

"We think economic contraction in China - actual negative real growth numbers - sometime in the next two or three years," Bill Smead, Chief Investment Officer at Smead Capital Management told CNBC on Thursday.

Smead believes the Chinese economy will slow down by 3% for two straight quarters in the short to medium term.

A forecast made by the national research agency says that China’s economy will grow 9.5% in the first half of 2011 and sustain much of that pace for the rest of the year with little chances of a hard landing.

Published in the official China Securities Journal the forecast made by the State Information Centre (SIC) predicts that the annual inflation would be 5.3 percent in the first half and 4.9 percent for the whole of 2011. It said inflation was set to hit a new high in June, but did not give a specific forecast.

Inflation in China increased in May to reach a 34-month high of 5.5 percent which spurs the government to tighten its monetary policy as the economic growth is slowing down. It is now a top priority for Beijing to taken control of the inflation.

The conclusion of the economist who analyzed Tuesday data says the world's second-biggest economy is slowing down, but not too quickly.

Gold lose its early gains and traded nearly flat on Friday as the US dollar surged up and expectations mounted that U.S. inflationary pressures eased in April.

Silver was also stationary after bouncing off a sharp fall overnight that shaved nearly 3 percent off the price at one point.

Headline consumer price index data out later on Friday is expected to show a more subdued rise of 0.4 percent versus 0.5 percent in March, according to a Reuters poll , reducing gold's appeal among investors seeking an inflation hedge.

Last week member countries of International Monetary Fund expressed their concern over rising inflation in emerging markets fearing that it could have adverse effect on rich countries too.

On Saturday the 187 IMF states recognized the alarm among developing countries about huge inflows of speculative cash that are stoking their growth but also their inflation rates.

Gold regained some losses on Wednesday after its biggest decline in a month in the previous session, shrugging off falls in exchange traded fund holdings and gaining support on inflation concerns in major gold buyer China.

Silver was within sight of its highest level in more than three decades as steady physical demand from India helped it regain $40 an ounce. The gold-to-silver ratio was at a 28-year low.

Spot gold added $2.81 to $1,456.76 an ounce by 0558 GMT after falling as low as $1,443.49 an ounce on Tuesday, tracking declines in oil prices.

Federal Reserve chairman Ben Bernanke said this week that a recent spike of inflation is driven mainly by rising commodity prices across the globe and it is unlikely stay persistent.

These comments are in sharp contrast to other US central bank officials who believe the time is coming for the Fed to begin tightening monetary policy.

Earlier Atlanta Fed President Dennis Lockhart also said that inflation would probably remain moderate.

Top Federal Reserve officials stated this week that the US economic recovery is gaining momentum.

Sandra Pianalto, a Cleveland Fed President, said that she expects US recovery to go further at a moderate pace and rising commodity and energy prices will have only temporarily pressure on broader consumer prices.

"The recovery seems to have established a firmer footing. I am seeing clearer signs of a virtuous cycle of growth," Pianalto said in a speech at the University of Akron.

A top International Monetary Fund official warned this week that overheating is threatening to the emerging economies that powered the global recovery because of the too fast growth.

Emerging markets like China and Brazil made every effort to contain inflation and seize heavy flows of investments. IMF’s first deputy managing director, John Lipsky said that the fund is increasingly concerned about the excessive growth.

According to the latest survey of the NABE economists the immense U.S. budget deficit is the gravest threat facing the economy, topping high unemployment and the risk of inflation or deflation.

47 member panel of forecasters of the National Association for Business Economics increased the estimate for the 2011 federal deficit to $1.4 trillion from $1.1 trillion in its previous survey in November.

This week the Federal Reserve made a tepid forecast for the economic development in spite of recent data that suggested that recovery was strengthening and justifying $600 billion bond-buying program.

After its policy-setting meeting the fed said that measures of underlying inflation were "somewhat low" although it acknowledged rising commodity prices that have fueled global inflation worries.

According to new stats from the Conference Board US consumer confidence increased more than expected this month to its highest level in 8 months since May 2010. The growth was supported by growing optimism about the economy and the jobs market.

The Conference Board says that its index of consumer attitudes jumped to 60.6 in January, the highest since May 2010, from an upwardly revised 53.3 in December.

According to the forecast made by a Chinese governmental researcher China’s gross domestic product will grow by 9.8% this year with inflation most likely standing at around 3.7%.

Meantime, domestic demand will become a bigger driver of the Chinese economy this year and foreign trade growth will likely slow as compared to the previous year, says the Economic Forecasting Institute of the China Academy of Sciences.

As China announced interest rate increase speculations arose that it would help curb inflation which led most Asian stocks to rise.