Slower climb in China prices eases strain to tighten policies
By Wang Yanlin |
February 12, 2010, Friday
|
Print Edition
Print Edition
CHINA'S price indices grew slower than expected in January, reducing pressure on the authorities to tighten the relatively loose policies which were designed to stimulate the economy.
The Consumer Price Index, the main gauge of inflation, rose 1.5 percent from a year earlier last month, the National Bureau of Statistics said yesterday. It slowed from a gain of 1.9 percent in December.
The Producer Price Index, the factory-gate measurement of inflation, grew 4.3 percent year on year in January, gaining from a rise of 1.7 percent in December. But the growth in the PPI still fell short of a general forecast of about 4.7 percent.
"The moderate pace of price increases reflects that inflationary pressure is not so formidable as some people have forecast," said Li Maoyu, an analyst of Changjiang Securities Co.
"It provides a foundation for China to continue its relatively easy fiscal and monetary policies to secure a stable economic recovery."
Zuo Xiaolei, an analyst of China Galaxy Securities Co, said the rises in CPI and PPI are within control.
"The future consumer prices may pick up quickly, but it is largely due to a low comparative base last year," Zuo said. She expected the CPI this month to grow 2 to even 3 percent on an annual basis. But excluding the effect of a low base, the real CPI growth in February may settle at about 1.5 percent.
Consumer prices in China ended a losing streak of nine months in November, while the PPI reversed the plunge of 12 straight months in December after the nation's economy stabilized, thanks to a massive 4 trillion yuan (US$586 billion) stimulus package.
Food prices, which account for a third of the CPI basket, rose 3.7 percent last month from a year earlier and became the major driver of the CPI. The non-food sector edged up 0.5 percent.
Price increases in raw materials propelled the rise in PPI in January. The cost of raw materials jumped by an annual 8.6 percent, with crude oil prices surging 69.7 percent.
People's Bank of China Governor Zhou Xiaochuan has said that inflation must be watched closely.
The Consumer Price Index, the main gauge of inflation, rose 1.5 percent from a year earlier last month, the National Bureau of Statistics said yesterday. It slowed from a gain of 1.9 percent in December.
The Producer Price Index, the factory-gate measurement of inflation, grew 4.3 percent year on year in January, gaining from a rise of 1.7 percent in December. But the growth in the PPI still fell short of a general forecast of about 4.7 percent.
"The moderate pace of price increases reflects that inflationary pressure is not so formidable as some people have forecast," said Li Maoyu, an analyst of Changjiang Securities Co.
"It provides a foundation for China to continue its relatively easy fiscal and monetary policies to secure a stable economic recovery."
Zuo Xiaolei, an analyst of China Galaxy Securities Co, said the rises in CPI and PPI are within control.
"The future consumer prices may pick up quickly, but it is largely due to a low comparative base last year," Zuo said. She expected the CPI this month to grow 2 to even 3 percent on an annual basis. But excluding the effect of a low base, the real CPI growth in February may settle at about 1.5 percent.
Consumer prices in China ended a losing streak of nine months in November, while the PPI reversed the plunge of 12 straight months in December after the nation's economy stabilized, thanks to a massive 4 trillion yuan (US$586 billion) stimulus package.
Food prices, which account for a third of the CPI basket, rose 3.7 percent last month from a year earlier and became the major driver of the CPI. The non-food sector edged up 0.5 percent.
Price increases in raw materials propelled the rise in PPI in January. The cost of raw materials jumped by an annual 8.6 percent, with crude oil prices surging 69.7 percent.
People's Bank of China Governor Zhou Xiaochuan has said that inflation must be watched closely.
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