Food prices hold down inflation rate
Print Edition
CHINA’S inflation growth moderated for the first time in four months in September as food costs scaled back, the National Bureau of Statistics said yesterday.
The Consumer Price Index, the main gauge of inflation, expanded 1.6 percent from a year earlier, down from August’s 2 percent increase and ending an upward trend that had begun in May.
Food prices, which account for nearly a third of the CPI basket, added 2.7 percent in September, compared with 3.7 percent in the previous month.
The cost of fresh vegetables rose 10.4 percent last month, down from August’s 15.9 percent surge. Prices for fresh fruit and eggs were down 10.7 percent and 10.2 percent respectively. However, the cost of pork jumped 17.4 percent year on year.
Prices in the non-food sector edged up 1 percent in September, compared with August’s 1.1 percent rise.
Yu Qiumei, a researcher at the bureau, said China managed to raise food supplies during the past month, which brought the inflation rate down from its one-year high in August.
Liu Ligang, chief economist for China at Australia & New Zealand Banking Group Ltd, said sharp price increases since March appeared to have moderated.
“The inflation growth should remain subdued in the fourth quarter,” Liu said. “China’s deflation outlook has not been changed because another indicator of inflation remained negative and price pressure continued to trend down.”
The Producer Price Index, the factory-gate measurement of inflation and a harbinger of future consumer prices, declined 5.9 percent in September, the same as in August, and marked the 43rd consecutive month of decline.
“As economic activities and business outlook head south, banks are still reluctant to raise the offer of credit to the real activity sector,” Liu said. “While money market interest rates have remained stable, new loans extended to support non-policy activities are expected to be lukewarm, and it poses a risk to the future economic growth.”
China’s economic performance surprised the market with a 7 percent increase in the second quarter, when a 6.8 percent rise had been expected
But figures in the past three months, including trade, industrial production, retail sales and fixed-asset investment, all moderated.
The latest figures showed China’s trade volume contracted 7.9 percent in the first three quarters, far behind the government target of an increase of around 6 percent for the year.
The official Purchasing Managers’ Index, a gauge of comprehensive operational conditions in the state-owned manufacturing sector, landed at 49.8 in September, indicating weakening industrial activities for the second straight month.
Some analysts forecast that third quarter gross domestic product growth, due to be released on Monday, will have edged down to 6.4 percent, compared with the full-year target of around 7 percent.
“China needs to further ease monetary policy and make the efforts more targeted to support the real activity sector,” said Lian Ping, chief economist at Bank of Communications, adding if the inflation falls further, the central bank may adjust interest rates.
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