Inflation falls to 14-month low, a path to easing
By Wang Yanlin |
December 10, 2011, Saturday
|
Print Edition
Print Edition
CHINA'S inflation weakened to a 14-month low in November thanks to cheaper food. The drop allows more room for policy moves to boost a slowing economy as the industrial output growth hit its slowest pace in more than two years.
The Consumer Price Index, the main inflation gauge, expanded 4.2 percent from a year earlier last month, the National Bureau of Statistics said yesterday. It eased sharply from the 5.5 percent pace of October, moderated for a fourth straight month, and was the slowest since September 2010.
Food costs, a major force driving prices up, advanced 8.8 percent year on year last month, down from 11.9 percent in October.
"The CPI growth cooled more than expected," said Tang Jianwei, an analyst at Bank of Communications. "It confirms a rapidly easing inflation."
In fact, a batch of November data largely showed that growth in the world's second-largest economy was slowing further as it feels the chill of the eurozone debt crisis.
Industrial output growth slowed to 12.4 percent in November, below expectations and its weakest pace since August 2009. The weakness was flagged by the official purchasing managers' index, which showed factory activity in November shrank from October.
November retail sales rose 17.3 percent from a year earlier, slightly outpacing October's 17.2 percent and confounding economists, who expected a slowdown to 16.9 percent. Still, the overall slowing trend was clear.
Inflationary pressure may fall further in the coming months as the Producer Price Index, a factory-gate inflation gauge and a harbinger of future consumer prices, slipped to a 23-month low of 2.7 percent in November.
"It lays a foundation for further relaxation in monetary policies to support growth," said Zhou Hao, an economist at Australia and New Zealand Banking Group Ltd. He said inflation likely will continue to be less than 5 percent in the coming months, and may even fall under 4 percent.
"The Chinese government should consider more policy easing to stabilize the economic slowdown," Zhou said. "For the property sector, it's better to carry out more market-based policies instead of using too many administrative orders. Otherwise, it may lead to a hard-landing in the realty industry."
Qu Hongbin, chief economist for China at HSBC, said inflation, with such a sharp moderation, is no longer a major threat to China's economy.
"China's gross domestic product may grow less than 8 percent in the first quarter of next year. Together with shrinking external demand and corrections in the property sector, growth has become a major issue now," Qu said, adding that China may need an overall policy easing.
But there are different voices. Li Maoyu, an analyst at Changjiang Securities Co, said China should be still alert of inflation because of easing policies in Europe and possibly another quantitative easing in the United States that may bring more liquidity into China to fan inflation.
China's consumer prices jumped 5.5 percent annually in the first 11 months, still far above the government's target of under 4 percent.
On Monday, China's central bank reduced lenders' reserve requirements for the first time in almost three years, unlocking about 400 billion yuan (US$63.5 billion) of capital into the market to bolster growth.
The move was partly prompted by shrinking manufacturing activities.
The official PMI, a comprehensive gauge of manufacturing activities across the country, fell to 49 in November. It was the first time in almost three years the rate fell below 50, which indicates contraction.
China's gross domestic product growth moderated to 9.1 percent from a year earlier in the third quarter, a slowdown from 9.5 percent in the second quarter and 9.7 percent in the first three months, and a slew of financial institutions have lowered their forecast for China's economic growth next year.
The Consumer Price Index, the main inflation gauge, expanded 4.2 percent from a year earlier last month, the National Bureau of Statistics said yesterday. It eased sharply from the 5.5 percent pace of October, moderated for a fourth straight month, and was the slowest since September 2010.
Food costs, a major force driving prices up, advanced 8.8 percent year on year last month, down from 11.9 percent in October.
"The CPI growth cooled more than expected," said Tang Jianwei, an analyst at Bank of Communications. "It confirms a rapidly easing inflation."
In fact, a batch of November data largely showed that growth in the world's second-largest economy was slowing further as it feels the chill of the eurozone debt crisis.
Industrial output growth slowed to 12.4 percent in November, below expectations and its weakest pace since August 2009. The weakness was flagged by the official purchasing managers' index, which showed factory activity in November shrank from October.
November retail sales rose 17.3 percent from a year earlier, slightly outpacing October's 17.2 percent and confounding economists, who expected a slowdown to 16.9 percent. Still, the overall slowing trend was clear.
Inflationary pressure may fall further in the coming months as the Producer Price Index, a factory-gate inflation gauge and a harbinger of future consumer prices, slipped to a 23-month low of 2.7 percent in November.
"It lays a foundation for further relaxation in monetary policies to support growth," said Zhou Hao, an economist at Australia and New Zealand Banking Group Ltd. He said inflation likely will continue to be less than 5 percent in the coming months, and may even fall under 4 percent.
"The Chinese government should consider more policy easing to stabilize the economic slowdown," Zhou said. "For the property sector, it's better to carry out more market-based policies instead of using too many administrative orders. Otherwise, it may lead to a hard-landing in the realty industry."
Qu Hongbin, chief economist for China at HSBC, said inflation, with such a sharp moderation, is no longer a major threat to China's economy.
"China's gross domestic product may grow less than 8 percent in the first quarter of next year. Together with shrinking external demand and corrections in the property sector, growth has become a major issue now," Qu said, adding that China may need an overall policy easing.
But there are different voices. Li Maoyu, an analyst at Changjiang Securities Co, said China should be still alert of inflation because of easing policies in Europe and possibly another quantitative easing in the United States that may bring more liquidity into China to fan inflation.
China's consumer prices jumped 5.5 percent annually in the first 11 months, still far above the government's target of under 4 percent.
On Monday, China's central bank reduced lenders' reserve requirements for the first time in almost three years, unlocking about 400 billion yuan (US$63.5 billion) of capital into the market to bolster growth.
The move was partly prompted by shrinking manufacturing activities.
The official PMI, a comprehensive gauge of manufacturing activities across the country, fell to 49 in November. It was the first time in almost three years the rate fell below 50, which indicates contraction.
China's gross domestic product growth moderated to 9.1 percent from a year earlier in the third quarter, a slowdown from 9.5 percent in the second quarter and 9.7 percent in the first three months, and a slew of financial institutions have lowered their forecast for China's economic growth next year.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
