Price surge fuels talk of 1 more rise in rates
By Wang Yanlin |
October 22, 2010, Friday
|
Print Edition
Print Edition
CHINA'S inflation rate in September surged to a 23-month high, fueling speculation that the central bank may raise rates one more time this year.
Consumer prices climbed 3.6 percent from a year earlier, led by rising food costs. Market analysts had forecast inflation of between 3.5 percent and 3.9 percent.
A spokesman for the National Bureau of Statistics said China is confident it can rein in prices and contain inflation to the government's 3 percent target for the year.
That goal gets harder with each passing month. September's pace picked up from an increase of 3.5 percent in August. That put real deposit rates in negative territory for an eighth month.
Food, which accounts for a third of the basket of goods used to measure inflation, rose 8 percent. The non-food sector remained steady with a 1.4 percent advance.
"The September inflation figure turned out to be not very surprising," said Wang Qing, an economist at Morgan Stanley. "The unexpected interest rate increase this week signaled that we might see a high figure."
On Tuesday, two days before the consumer price index data were released, the People's Bank of China announced it was lifting deposit and lending rates by 25 basis points. It was the first rate rise in 34 months.
The surprise move was interpreted by analysts as a sign that authorities weren't happy with the trend and intend to take a more aggressive stance in curtailing prices.
"This increase may signal the start of a rate rise cycle, as has been usually the case," said Chang Jian, an economist at Barclays Capital.
The statistics bureau spokesman, Sheng Laiyun, dismissed talk that inflation was getting out of control. He said it's still possible for China to meet its 3 percent target.
Consumer prices climbed 3.6 percent from a year earlier, led by rising food costs. Market analysts had forecast inflation of between 3.5 percent and 3.9 percent.
A spokesman for the National Bureau of Statistics said China is confident it can rein in prices and contain inflation to the government's 3 percent target for the year.
That goal gets harder with each passing month. September's pace picked up from an increase of 3.5 percent in August. That put real deposit rates in negative territory for an eighth month.
Food, which accounts for a third of the basket of goods used to measure inflation, rose 8 percent. The non-food sector remained steady with a 1.4 percent advance.
"The September inflation figure turned out to be not very surprising," said Wang Qing, an economist at Morgan Stanley. "The unexpected interest rate increase this week signaled that we might see a high figure."
On Tuesday, two days before the consumer price index data were released, the People's Bank of China announced it was lifting deposit and lending rates by 25 basis points. It was the first rate rise in 34 months.
The surprise move was interpreted by analysts as a sign that authorities weren't happy with the trend and intend to take a more aggressive stance in curtailing prices.
"This increase may signal the start of a rate rise cycle, as has been usually the case," said Chang Jian, an economist at Barclays Capital.
The statistics bureau spokesman, Sheng Laiyun, dismissed talk that inflation was getting out of control. He said it's still possible for China to meet its 3 percent target.
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