China's consumer price index is expected to reach 5 percent in November but will drop back slightly in December, according to the latest report released by UBS on Tuesday.

Raising interest rates and improving liquidity management could help to control inflation and prevent the increase in food prices from expanding to other commodities, the report also said. The central bank is expected to lower the loan target for next year, with new loans totaling between 6.5 trillion yuan (US$978 billion) and 7 trillion yuan (US$1.05 trillion).

The deposit reserve ratio is also expected to increase and the inflow of foreign capital will also be controlled.

UBS forecasted that China's GDP will increase 9 percent and CPI will increase between 4 percent and 4.5 percent, higher than previously forecasted.

China's business press carried the story above on Wednesday. China.org.cn has not checked the stories and does not vouch for their accuracy.