CPI peaks in June: bank report says

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China's consumer price index (CPI), a major gauge of inflation, has increased to its peak this year in June and its growth will slow down over the rest of the year, the Bank of Communications (BOC) said in a report Saturday.

China's inflation escalated to the highest level in three years with CPI jumping 6.4 percent year-on-year in June, mainly driven by a 14.4 percent surge in food prices, the National Bureau of Statistics said.

"The CPI growth has peaked in June for this year and is expected to slow down in the second half," BOC economist Lu Zhiming said, adding "but generally inflationary pressure remains at high level."

The report attributed the decline in prices growth in the latter half of the year to slower growth of food prices and economy and less carryover effect. Tighter international capital flows will also restrain price hikes of commodities, it added.

To contain stubbornly high inflation, the central bank has so far raised the benchmark interest rates three times this year including a latest rate hike of 25 basis points announced on July 6.

It also hiked the reserve requirement ratio six times, ordering banks to keep a record high of 21.5 percent of their deposits in reserve to rein in excess lending.

The report said the country's monetary polices will keep stable in the future as prices growth will slow, the economy cools and small- and medium-sized enterprises face difficulties in financing.

The round of interest rate hikes is close to end after July's move, it said.