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November CPI falls to 4.2% on cheaper food
By Wang Yanlin |
December 9, 2011, Friday
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Online Edition
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CHINA'S inflation weakened to a 14-month low in November thanks to less costly food 鈥 allowing more room for policy moves to support a slowing economy.
The Consumer Price Index, a main gauge of inflation, expanded 4.2 percent from a year earlier last month, the National Bureau of Statistics said today.
It eased sharply from a pace of 5.5 percent in October, extending a moderation streak that has lasted four consecutive months. November CPI expanded at the slowest pace since September, 2010.
Food costs, a major force driving up prices, advanced 8.8 percent year on year last month, less than October's 11.9 percent making it the biggest contributor to lower inflation.
"CPI growth cooled more than expected," said Tang Jianwei, an analyst at Bank of Communications who earlier predicted a rate of 4.3 percent. "It confirms rapidly easing inflation."
Inflationary pressure may fall further in the coming months as the Producer Price Index, a factory-gate measurement of inflation 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 expected inflation to remain below 5 percent in the coming months, even less than 4 percent.
Starting 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) in capital to bolster growth.
The move was partly prompted by shrinking manufacturing activities. The official Purchasing Managers' Index, a comprehensive gauge of manufacturing activities across the country, fell to 49 in November. It was the first time in almost three years for the rate to be below 50, which indicates contraction.
China's gross domestic product 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.
A slew of financial institutions have lowered their forecast of China's economic growth next year. Barclays Capital on Monday announced a cut in its growth estimate to 8.1 percent from a previous 8.4 percent, citing the rapidly deteriorating eurozone crisis and a broader domestic property market correction.
The Consumer Price Index, a main gauge of inflation, expanded 4.2 percent from a year earlier last month, the National Bureau of Statistics said today.
It eased sharply from a pace of 5.5 percent in October, extending a moderation streak that has lasted four consecutive months. November CPI expanded at the slowest pace since September, 2010.
Food costs, a major force driving up prices, advanced 8.8 percent year on year last month, less than October's 11.9 percent making it the biggest contributor to lower inflation.
"CPI growth cooled more than expected," said Tang Jianwei, an analyst at Bank of Communications who earlier predicted a rate of 4.3 percent. "It confirms rapidly easing inflation."
Inflationary pressure may fall further in the coming months as the Producer Price Index, a factory-gate measurement of inflation 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 expected inflation to remain below 5 percent in the coming months, even less than 4 percent.
Starting 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) in capital to bolster growth.
The move was partly prompted by shrinking manufacturing activities. The official Purchasing Managers' Index, a comprehensive gauge of manufacturing activities across the country, fell to 49 in November. It was the first time in almost three years for the rate to be below 50, which indicates contraction.
China's gross domestic product 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.
A slew of financial institutions have lowered their forecast of China's economic growth next year. Barclays Capital on Monday announced a cut in its growth estimate to 8.1 percent from a previous 8.4 percent, citing the rapidly deteriorating eurozone crisis and a broader domestic property market correction.
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