October CPI rises to 8-month high of 3.2%
Print Edition
China’s inflation reached an eight-month high last month, the National Bureau of Statistics said yesterday.
However, the world’s second-largest economy grew steadily in the month with other key data little changed from September.
The Consumer Price Index, the main gauge of inflation, reached an eight-month high of 3.2 percent in October, but it was still within a safe level. September’s figure was 3.1 percent.
Prices were driven mostly by higher food costs that expanded 6.5 percent from a year earlier last month, compared with a 6.1 percent rise in September.
Zhou Hao, an analyst at Australia & New Zealand Banking Group Ltd, said China’s inflation remained controllable but asset bubble concerns were rising.
“While inflation is likely to exceed 3 percent again in November, inflation for the whole year will be around 2.7 percent, well below the control target of 3.5 percent,” Zhou said.
China has tightened market liquidity conditions since mid-October. But Zhou said a monetary tightening will cause market interest rates to increase, triggering even stronger capital inflows and expectations for the appreciation of the yuan.
“This capital will eventually go to the property sector, raising concerns of an asset bubble,” Zhou said.
Home price increases have accelerated across the country. In October, home prices in China extended their momentum for the 17th straight month and, more notably, at an even faster pace.
Yu Qiumei, a researcher with the bureau, said inflation growth was stable on the whole as the Producer Price Index, or the factory-gate measurement of inflation, fell for the 20th consecutive month in October, indicating less inflationary pressure to come. The PPI slowed down 1.5 percent year on year, down from the drop of 1.3 percent in September.
Meanwhile, industrial production jumped 10.3 percent last month, up 0.1 percentage points from that in September.
Fixed-asset investment gained 20.1 percent in the first 10 months, down marginally from the increase of 20.2 percent in the first three quarters.
Retail sales added 13.3 percent on an annual basis to 2.15 trillion yuan (US$349 billion) in October. The pace was the same as in the previous month.
“China’s economy remains on the course of stable growth,” said Tang Jianwei, an economist at the Bank of Communications.
Premier Li Keqiang has said China’s economy needs to grow at least 7.2 percent a year to ensure the urban unemployment rate stays under 4 percent.
The growth target remains at 7.5 percent, Li said, adding that this target will be achieved this year.
Gross domestic product grew 7.7 percent from a year earlier in the first nine months. Economic growth in the third quarter accelerated to 7.8 percent from 7.5 percent in the second quarter.
The third plenary session of the Party’s Central Committee, which started yesterday, may shed new light on the pace and direction of reforms that weigh growth quality over speed, analysts said.
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