China may cap steel and cement prices to curb inflation as the nation rebuilds after the May 12 earthquake, Citigroup Inc. said.
The government may act as consumer prices are set to rise 7.4 percent this year, Lan Xue, the bank’s China research head, forecast in a report today. Steelmakers including Baoshan Iron & Steel Co. have raised prices 36 percent in 12 months, while cement from producers led by Anhui Conch Cement Co. rose 10 percent last year.
Inflation will accelerate because of increased demand for raw materials to repair destruction by China’s most powerful earthquake in 58 years, said Citigroup, which lifted it forecast this year from 5.8 percent. The fastest price gains among the world’s 10 biggest economies threaten social stability as China prepares for the Olympic Games in August.