High inflation numbers blamed on food costs, weather, holiday
Print Edition
China’s inflation grew to a seven-month high in September amid a spike in food prices, poor weather and the Mid-Autumn Festival holiday, data from the National Bureau of Statistics showed yesterday.
It may limit the central bank to carry out further measures to support the economy even as exports declined last month.
The Consumer Price Index, the main gauge of inflation, expanded 3.1 percent from a year earlier in September.
It quickened from the rise of 2.6 percent in August, and exceeded the market expectation by a large margin.
Food prices, which account for nearly one third in the CPI basket, jumped 6.1 percent year-on-year last month, up from the gain of 4.7 percent in August.
Yu Qiumei, a senior statistician at the bureau, said the rising food prices contributed the most to the increase of CPI, along with other factors such as higher costs of gasoline oil and travelling, as well as the droughts and floods that took place last month.
Zhou Hao, an analyst at Australia & New Zealand Banking Group Ltd, said China’s inflation momentum has accelerated.
“The CPI inflation is likely to remain above 3 percent in October and November,” Zhou said. “The growing inflationary pressure may not allow the central bank to change the tightening bias in the monetary policy for the remainder of the year.”
Zhou said the likelihood of an interest rate or a reserve requirement ratio cut before the end of this year has been greatly reduced.
However, some analysts shrugged off the inflationary pressure.
Zhu Haibin, chief economist for China at JPMorgan, said the higher-than-expected reading of September CPI did not change his view that inflation remains at benign levels in the near term.
“Our full-year forecast of CPI inflation now stands at 2.7 percent, and the fourth-quarter CPI may remain stable at the current level,” Zhu said. “The relatively benign inflation dynamics suggest that stabilizing growth and economic reform are still the priority issues for policymakers in the near term.”
In the first three quarters, China’s CPI inflation rose 2.5 percent year on year, well below the 3.5 percent limit set by the government.
The Producer Price Index, which tracks factory-gate inflation, dropped 1.3 percent on an annual basis last month, narrowing from the 1.6 percent decline in August, according to the statistics bureau.
China’s gross domestic product expanded 7.5 percent in the second quarter, the slowest in more than one year. The third-quarter growth rate, to be released on Friday, was expected to be around 7.7 percent.
Although China’s economy has exhibited signs of recovery with major business activity data beating expectation in the past few months, some analysts said the data may turn disappointing in September due to the limited effect of China’s mini stimulus.
China’s exports fell 0.3 percent from a year earlier in September, the first drop in three months and dragging down the trade growth of the world’s second-largest economy, data from the General Administration of Customs showed on Saturday.
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