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November inflation seen falling below 5%
By Wang Yanlin |
December 6, 2011, Tuesday
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Online Edition
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CHINA'S inflation growth may fall below 5 percent in November thanks to less expensive food costs and a higher comparative base, analysts said.
Some analysts predicted the consumer price index, a main gauge of inflation, might expand at a rate as low as 4.2 percent annually in November.
Such a rate will cement an inflationary downtrend that reached 5.5 percent in October after 6.1 percent in September -- down from July's 6.5 percent, which was a 37-month high.
The National Bureau of Statistics is set to unveil November's inflation figure, as well as a batch of other key economic data, on Friday.
Lu Zhengwei, an economist at Industrial Bank who projected a rate of between 4.2 percent and 4.4 percent, said slower growth in food costs was a major factor dragging down the overall inflation index in November.
"Ample supply of food, especially vegetables, contributed to a weakening price-rising process," Lu said, noting inflation will no longer be the government priority next year because of its tamed pace.
Food costs, which makes up nearly one-third of the CPI basket and a major force to drive prices up, jumped 11.9 percent year on year in October, already slowing down from 13.4 percent in both September and August.
According to official data, 18 vegetables tracked by the Ministry of Commerce reported price drops in the last week of November, compared with the previous week. Pork costs also lost 1 percent from a week earlier.
"The easing inflation provides more room for monetary policy flexibility," said Tang Jianwei, an economist at Bank of Communications, who predicted an inflation rate of around 4.3 percent in November and said China might allow more cuts of lenders' reserve requirements to shore up market liquidity.
China's central bank reduced lenders' reserve requirements for the first time in almost three years starting yesterday, unlocking about 400 billion yuan (US$63.5 billion) in capital to bolster growth.
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.
A slew of financial institutions have lowered their forecast of China's economic growth next year. Barclays Capital yesterday cut its estimate to 8.1 percent from a previous 8.4 percent, citing the rapidly deteriorating eurozone crisis and a broader domestic property market correction.
Some analysts predicted the consumer price index, a main gauge of inflation, might expand at a rate as low as 4.2 percent annually in November.
Such a rate will cement an inflationary downtrend that reached 5.5 percent in October after 6.1 percent in September -- down from July's 6.5 percent, which was a 37-month high.
The National Bureau of Statistics is set to unveil November's inflation figure, as well as a batch of other key economic data, on Friday.
Lu Zhengwei, an economist at Industrial Bank who projected a rate of between 4.2 percent and 4.4 percent, said slower growth in food costs was a major factor dragging down the overall inflation index in November.
"Ample supply of food, especially vegetables, contributed to a weakening price-rising process," Lu said, noting inflation will no longer be the government priority next year because of its tamed pace.
Food costs, which makes up nearly one-third of the CPI basket and a major force to drive prices up, jumped 11.9 percent year on year in October, already slowing down from 13.4 percent in both September and August.
According to official data, 18 vegetables tracked by the Ministry of Commerce reported price drops in the last week of November, compared with the previous week. Pork costs also lost 1 percent from a week earlier.
"The easing inflation provides more room for monetary policy flexibility," said Tang Jianwei, an economist at Bank of Communications, who predicted an inflation rate of around 4.3 percent in November and said China might allow more cuts of lenders' reserve requirements to shore up market liquidity.
China's central bank reduced lenders' reserve requirements for the first time in almost three years starting yesterday, unlocking about 400 billion yuan (US$63.5 billion) in capital to bolster growth.
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.
A slew of financial institutions have lowered their forecast of China's economic growth next year. Barclays Capital yesterday cut its 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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