Several prominent economists said that China could fail to meet the government inflation target of 4 percent this year. Chief economists for the Bank of Communications and brokerage Guotai Junan said at a panel discussion organized by Bloomberg that China’s consumer prices could rise by more than 4.5 percent this year. A Citigroup economist attending the same panel said that inflation should rise by about 5 percent. China’s consumer prices jumped by 5.1 percent in November, the biggest rise in 28 months, on the back of soaring food prices. Guotai Junan economist Li Xunlei said that food inflation may have reached 10 percent in 2010. China has yet to release inflation figures for 2010. However, state media cited an official with the powerful National Development and Reform Commission as saying that full year inflation will be 3.3 percent for 2010 and that China must prepare for a long-term fight against inflation. Citigroup economist Shen Minggao said that higher prices for agricultural products and commodities will only have a short-term influence on China’s inflation. Rising salaries, however, will keep the country’s inflation at a high level for the next five to 10 years.

The benchmark Shanghai Composite Index climbed 0.4 percent to 2804.05 on Tuesday, led by banks and property developers. Analysts expect the index to continue trading in a narrow range of 2750 to 2800 as investors wait for the release of fourth-quarter economic data around Jan. 20. Property developer Gemdale Corp rose 7.8 percent to RMB7.43, reversing a 2 percent decline on Monday. China Vanke rose 3.3 percent to RMB9.03, after falling 1.7 percent the previous day. These gains follow reports in state media that the cities of Shanghai and Chongqing would be allowed in introduce a controversial real estate tax. Analysts said that the developers’ rising share prices indicate that investors don’t anticipate the pilot programs to hurt developers’ earnings or to lower property prices.

The Bombay Stock Exchange’s Sensitive Index fell 0.1 percent to 19,196.35 on Tuesday, erasing early-day gains. Investors remain nervous that high inflation in the country will lead the Reserve Bank of India to raise interest rates before its scheduled monetary policy review on Jan. 25. India’s food price inflation soared by 18.32 percent year on year in the week ended Dec. 25, 2010. Reliance Industries, the country’s largest company in terms of market capitalization, declined 1.6 percent to INR1,014.30 due to selling by foreign investors. Foreign institutional investors also sold off shares of technology firms, leading Infosys Technologies to a 2 percent drop to INR3,329.25.