BEIJING - HALF the people living in China's cities expect prices to continue to rise in coming months, state media reported Thursday, citing a central bank survey.

The survey, which covered nearly 20,000 people in 49 cities, found that for the second quarter of the year 50.5 per cent thought inflation would still go up in the next three months, the China Daily said.

People deeming prices 'too high' reached 45.0 per cent, up 15.5 percentage points from a year ago, but declining for the first time since 2007 from the 49.2 per cent recorded in the first quarter of this year, it said.

If people expect inflation to remain high, they may hurry to purchase items they plan to buy anyway before they get more expensive, pushing up demand and boosting prices. China's inflation hit 7.7 per cent in May, easing only slightly from 8.5 per cent in April and still lingering at 12-year highs. Beijing last week announced it will hike retail petrol and diesel prices by as much as 18 per cent in a bid to close the gap between state-set domestic caps and soaring world oil costs, stoking fears of more inflation. -- AFP