China's inflation eases to 15-month low in December
By Wang Yanlin |
January 13, 2012, Friday
|
Print Edition
Print Edition
China's inflation dropped to a 15-month low in December, giving more room for policy moves to support a slowing economy.
The Consumer Price Index, the main gauge of inflation, expanded 4.1 percent from a year earlier last month, the National Bureau of Statistics said yesterday.
The pace was slightly down from November's 4.2 percent, and was the lowest since September 2010.
Food costs, accounting for nearly a third of the basket, increased 9.1 percent annually, rebounding from the growth of 8.8 percent a month earlier due to robust consumer demand in the runup to New Year and the Spring Festival.
Prices in the non-food sector edged up 1.9 percent, easing from November's 2.2 percent.
"The inflation rate is a bit higher than our previous projection of 4 percent," said Zhou Hao, an economist at Australia and New Zealand Banking Group Ltd.
"It's mainly due to temporary factors and can't change the trend of weakening food prices as well as overall moderating inflation in the long run."
Li Maoyu, an analyst at Changjiang Securities Co, said the CPI may continue to stay at around 4 percent this month because of the influence of the Spring Festival, and will exhibit a more apparent slowdown over the next few months.
"Such a trend will make China more confident in carrying out policy easing in case of necessity," Li said.
The Producer Price Index, a factory-gate measurement of inflation and a harbinger of future CPI, rose 1.7 percent from a year earlier in December, compared to 2.7 percent in November.
China's CPI thus settled at an annualized 5.4 percent in 2011, far above the 4 percent target set at the beginning of the year.
Looking ahead, some economists say inflation may stay at around 3 percent throughout 2012, which will be a year of policy easing.
"Inflation is no longer a major threat, but slowing economic output," said Qu Hongbin, HSBC chief economist for China. He expects three reserve requirement ratio cuts in the first half of the year, moves that he said could help to boost market liquidity.
"If the CPI growth is to drop below 3 percent in the middle of this year, the central bank may allow one interest rate cut," Qu said.
Lu Zhiming, an analyst at the Bank of Communications, said that the inflation rate may move between 2.7 percent and 3.3 percent over the year due to lower food costs and a higher comparative base.
"Policies will become neutral-easing to support economic growth, and we expect two to four reserve ratio cuts, and at the same time, we do not exclude the possibility of one interest rate reduction if the economy weakens sharply," Lu said.
The Consumer Price Index, the main gauge of inflation, expanded 4.1 percent from a year earlier last month, the National Bureau of Statistics said yesterday.
The pace was slightly down from November's 4.2 percent, and was the lowest since September 2010.
Food costs, accounting for nearly a third of the basket, increased 9.1 percent annually, rebounding from the growth of 8.8 percent a month earlier due to robust consumer demand in the runup to New Year and the Spring Festival.
Prices in the non-food sector edged up 1.9 percent, easing from November's 2.2 percent.
"The inflation rate is a bit higher than our previous projection of 4 percent," said Zhou Hao, an economist at Australia and New Zealand Banking Group Ltd.
"It's mainly due to temporary factors and can't change the trend of weakening food prices as well as overall moderating inflation in the long run."
Li Maoyu, an analyst at Changjiang Securities Co, said the CPI may continue to stay at around 4 percent this month because of the influence of the Spring Festival, and will exhibit a more apparent slowdown over the next few months.
"Such a trend will make China more confident in carrying out policy easing in case of necessity," Li said.
The Producer Price Index, a factory-gate measurement of inflation and a harbinger of future CPI, rose 1.7 percent from a year earlier in December, compared to 2.7 percent in November.
China's CPI thus settled at an annualized 5.4 percent in 2011, far above the 4 percent target set at the beginning of the year.
Looking ahead, some economists say inflation may stay at around 3 percent throughout 2012, which will be a year of policy easing.
"Inflation is no longer a major threat, but slowing economic output," said Qu Hongbin, HSBC chief economist for China. He expects three reserve requirement ratio cuts in the first half of the year, moves that he said could help to boost market liquidity.
"If the CPI growth is to drop below 3 percent in the middle of this year, the central bank may allow one interest rate cut," Qu said.
Lu Zhiming, an analyst at the Bank of Communications, said that the inflation rate may move between 2.7 percent and 3.3 percent over the year due to lower food costs and a higher comparative base.
"Policies will become neutral-easing to support economic growth, and we expect two to four reserve ratio cuts, and at the same time, we do not exclude the possibility of one interest rate reduction if the economy weakens sharply," Lu said.
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