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Lower food costs seen to weaken February inflation
By Wang Yanlin |
March 7, 2012, Wednesday
|
Online Edition
Online Edition
DECLINING food costs may cause a substantial weakening in China's inflation in February to around 3.2 percent – ending a two-year stream of negative de facto interest rates, some economists estimated.
The easing inflationary pressure will create more room for fiscal and monetary stimulus, but the implementation will be gradual as the control of price rises remain a government priority, they said.
The National Bureau of Statistics is set to release the key economic data for February on Friday.
"Falling food costs after the Spring Festival has steered inflation back onto the easing track," said Tang Jianwei, an economist at Bank of Communications. He estimated the rate for February will move between 3 percent and 3.4 percent.
Consumer Price Index, the main gauge of inflation, rebounded unexpectedly to a three-month high of 4.5 percent in January because of higher food costs during the festival.
In December, the rate softened to 4.1 percent, the lowest since September of 2010. But still, last year's overall inflation of 5.4 percent was far more than the government target of below 4 percent.
The high rate has put China's benchmark one-year deposit interest rate, which registered 3.5 percent currently, into a de facto negative rate since February of 2010.
Li Maoyu, an analyst at Changjiang Securities Co, said inflation may stand stable at around 3 percent in the rest of this year.
"China's economy is unlikely to realize double-digit growth as it did several years ago. But also, it won't experience a hard landing. Thus inflation may be kept relatively stable this year," Li said. He projected a rate of 3.2 percent for February.
China lowered its economic growth target for this year to 7.5 percent from the 8 percent in place since 2005, and set the inflation target at 4 percent, unchanged from that of last year.
The easing inflationary pressure will create more room for fiscal and monetary stimulus, but the implementation will be gradual as the control of price rises remain a government priority, they said.
The National Bureau of Statistics is set to release the key economic data for February on Friday.
"Falling food costs after the Spring Festival has steered inflation back onto the easing track," said Tang Jianwei, an economist at Bank of Communications. He estimated the rate for February will move between 3 percent and 3.4 percent.
Consumer Price Index, the main gauge of inflation, rebounded unexpectedly to a three-month high of 4.5 percent in January because of higher food costs during the festival.
In December, the rate softened to 4.1 percent, the lowest since September of 2010. But still, last year's overall inflation of 5.4 percent was far more than the government target of below 4 percent.
The high rate has put China's benchmark one-year deposit interest rate, which registered 3.5 percent currently, into a de facto negative rate since February of 2010.
Li Maoyu, an analyst at Changjiang Securities Co, said inflation may stand stable at around 3 percent in the rest of this year.
"China's economy is unlikely to realize double-digit growth as it did several years ago. But also, it won't experience a hard landing. Thus inflation may be kept relatively stable this year," Li said. He projected a rate of 3.2 percent for February.
China lowered its economic growth target for this year to 7.5 percent from the 8 percent in place since 2005, and set the inflation target at 4 percent, unchanged from that of last year.
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