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December inflation ebbs to 4.1%, lowest in 2 years

CHINA'S inflation continued to wane in December, giving more room for policy adjustments to energize a slowing economy.

The Consumer Price Index, the main gauge of inflation, expanded 4.1 percent year-on-year in December, the National Bureau of Statistics said today.

The pace was slightly down from November's 4.2 percent and was the lowest since September 2010.

Food costs, which accounted for nearly one third in the CPI basket, increased 9.1 percent annually, rebounding from an 8.8 percent increase in November due to robust demand in the run-up to New Year's Day and Spring Festival holidays.

Prices of non-food sectors edged up 1.9 percent, easing from November's 2.2 percent.

"The inflation rate is a bit higher than our estimation 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 and moderating inflation in the long run."

Li Maoyu, an analyst at Changjiang Securities Co, said the CPI growth may stay at about 4 percent this month because of the Spring Festival and slow down more visibly in ensuing months.

"Such a trend will give China more confidence to carry out policy easing if necessary," Li said.

The Producer Price Index, a factory-gate measure of inflation and a harbinger of future CPI, rose 1.7 percent from a year earlier in December, compared with 2.7 percent in November.

China's consumer prices thus registered an annualized growth of 5.4 percent in 2011, far above the government target of 4 percent set at the beginning of the year.



 

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