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Inflation weakens to 3.4%, sparking calls for policy stimulus
By Wang Yanlin |
May 11, 2012, Friday
|
Online Edition
Online Edition
CHINA'S inflation weakened as expected in April, making room for more policy stimulus to spur expansion in the world's second largest economy where more evidence of sluggishness emerged.
The Consumer Price Index, the main gauge of inflation, expanded 3.4 percent last month compared to a year ago, down from a 3.6 percent rise in March, the National Bureau of Statistics said this morning.
Food costs, which account for nearly one third in the basket, advanced 7 percent in April, compared with 7.5 percent a month earlier.
The CPI posted a surprising rebound in March after the index increased 3.2 percent in February, the slowest in 20 months.
"The latest data indicates easing inflationary pressure, and rising demand for policy stimulus," said Zhou Hao, an economist at Australia and New Zealand Banking Group Ltd.
China's exports and imports weakened more than feared in April, the General Administration of Customs said on Thursday.
China's gross domestic product increased 8.1 percent in the first quarter, the slowest in nearly three years. It prompted calls for looser monetary policies.
Inflation was once a major concern for policy-makers and is a key factor in determining monetary policy. But such worries about inflation are likely to be over.
The Producer Price Index, the factory-gate measurement of inflation and a harbinger of consumer prices, lost 0.7 percent in April, following a decrease of 0.3 percent in March.
Zhang Zhiwei, an analyst at Nomura, said the data reinforced his view that policy-makers' priorities should lie in promoting growth.
Zhang said he expects two cuts in the reserve requirement ratio this year, the first likely this month.
However, the People's Bank of China hasn't given any indication of its next move. It said on Thursday that China will maintain a prudent monetary policy in the months ahead, adding that some fine-tuning will occur at the appropriate time.
The economy still has many favorable conditions and positive factors to support steady growth, the central bank said in a report. The government will make its monetary policy more targeted, flexible and forward-looking, it said.
The Consumer Price Index, the main gauge of inflation, expanded 3.4 percent last month compared to a year ago, down from a 3.6 percent rise in March, the National Bureau of Statistics said this morning.
Food costs, which account for nearly one third in the basket, advanced 7 percent in April, compared with 7.5 percent a month earlier.
The CPI posted a surprising rebound in March after the index increased 3.2 percent in February, the slowest in 20 months.
"The latest data indicates easing inflationary pressure, and rising demand for policy stimulus," said Zhou Hao, an economist at Australia and New Zealand Banking Group Ltd.
China's exports and imports weakened more than feared in April, the General Administration of Customs said on Thursday.
China's gross domestic product increased 8.1 percent in the first quarter, the slowest in nearly three years. It prompted calls for looser monetary policies.
Inflation was once a major concern for policy-makers and is a key factor in determining monetary policy. But such worries about inflation are likely to be over.
The Producer Price Index, the factory-gate measurement of inflation and a harbinger of consumer prices, lost 0.7 percent in April, following a decrease of 0.3 percent in March.
Zhang Zhiwei, an analyst at Nomura, said the data reinforced his view that policy-makers' priorities should lie in promoting growth.
Zhang said he expects two cuts in the reserve requirement ratio this year, the first likely this month.
However, the People's Bank of China hasn't given any indication of its next move. It said on Thursday that China will maintain a prudent monetary policy in the months ahead, adding that some fine-tuning will occur at the appropriate time.
The economy still has many favorable conditions and positive factors to support steady growth, the central bank said in a report. The government will make its monetary policy more targeted, flexible and forward-looking, it said.
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