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Inflation rate hits two-year low, producer price drops further
By Wang Yanlin |
June 9, 2012, Saturday
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Online Edition
Online Edition
CHINA'S consumer prices rose at the slowest pace in two years in May, brushing off concerns of inflation and suggesting the reason behind recent government's decision of easing policies.
Consumer Price Index, the main gauge of inflation, expanded 3 percent from a year earlier last month, the National Bureau of Statistics said this morning.
It compared with the pace of 3.4 percent in April and previous market estimation of 3.2 percent.
Food costs, which make up nearly one third in the basket, increased 6.4 percent in May, less than 7 percent a month earlier.
Producer Price Index, the factory-gate yardstick of inflation and a harbinger of future consumer prices, dropped 1.4 percent last month, extending the loss stream for a third month and deepening from April's 0.7 percent fall.
"The weaker-than-expected data confirms that inflation is no longer the top priority," said Li Maoyu, an analyst at Changjiang Securities Co. "The slower growth pace of consumer prices is a reflection of weakening domestic demand, and may invite policy-makers to launch more supporting measures."
China's gross domestic product expanded 8.1 percent year on year in the first quarter, the slowest in nearly three years and stoking fears of a hard landing in the world's second-largest economy.
To support growth, China has rolled out a set of stimulus measures including subsidies for consumption of energy-efficient products, expansion of private investment in previously state-dominant sectors and faster approval of new investment projects.
On Thursday night, the central bank also announced an interest rate cut, the first since December of 2008.
But some economists warned the government should keep monetary policies from getting too loose which may fan up inflation again in the future.
Lian Ping, chief economist at Bank of Communications, said it is still difficult for China to fulfill the target of controlling inflation under 3 percent this year.
Consumer Price Index, the main gauge of inflation, expanded 3 percent from a year earlier last month, the National Bureau of Statistics said this morning.
It compared with the pace of 3.4 percent in April and previous market estimation of 3.2 percent.
Food costs, which make up nearly one third in the basket, increased 6.4 percent in May, less than 7 percent a month earlier.
Producer Price Index, the factory-gate yardstick of inflation and a harbinger of future consumer prices, dropped 1.4 percent last month, extending the loss stream for a third month and deepening from April's 0.7 percent fall.
"The weaker-than-expected data confirms that inflation is no longer the top priority," said Li Maoyu, an analyst at Changjiang Securities Co. "The slower growth pace of consumer prices is a reflection of weakening domestic demand, and may invite policy-makers to launch more supporting measures."
China's gross domestic product expanded 8.1 percent year on year in the first quarter, the slowest in nearly three years and stoking fears of a hard landing in the world's second-largest economy.
To support growth, China has rolled out a set of stimulus measures including subsidies for consumption of energy-efficient products, expansion of private investment in previously state-dominant sectors and faster approval of new investment projects.
On Thursday night, the central bank also announced an interest rate cut, the first since December of 2008.
But some economists warned the government should keep monetary policies from getting too loose which may fan up inflation again in the future.
Lian Ping, chief economist at Bank of Communications, said it is still difficult for China to fulfill the target of controlling inflation under 3 percent this year.
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