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China's inflation growth eases to a 13-month low in February
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CHINA’S inflation dropped to a 13-month low in February, leaving room for more accommodative policies after the slump of exports amid the possible cooling in the world’s second-largest economy.
The Consumer Price Index, the main gauge of inflation, rose 2 percent from a year earlier last month, slowing from the pace of 2.5 percent in January and lower than expected, the National Bureau of Statistics said today.
The Producer Price Index, the factory-gate measurement of inflation, also fell 2 percent year on year last month, down from January’s decrease of 1.6 percent and indicating less growth momentum for consumer prices.
Yu Qiumei, an analyst with the bureau, said a high comparative base last year was the main reason for the sharp slowdown of CPI growth, while food costs, which weigh nearly one third in the overall basket, remained flat in growth during the Spring Festival holiday.
Zhou Hao, an economist at Australia & New Zealand Banking Group Ltd, said the lower reading of CPI inflation also pointed to a soft festival consumption, partly due to fiscal austerity and anti-corruption efforts by the Chinese authorities.
“PPI inflation also trended lower, reflecting weak demand for manufacturing goods,” Zhou said. “As the PPI inflation has remained negative for two years, the risk of deflation is rising in the near term.”
Zhou said together with the trade data released yesterday, nearly all indicators suggested that China’s growth momentum has continued to slow down.
China’s exports slumped 18.1 percent from a year earlier in February, worse than expected even taking seasonal factors into consideration, data from the General Administration of Customs showed yesterday.
“The GDP growth in the first half of 2014 will likely be below 7.5 percent, which could trigger further policy easing over the foreseeable future,” Zhou said.
China has kept the economic growth target at 7.5 percent for this year, trying to balance between a moderate growth and deepening reforms.
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