A stall keeper selling eggs in a farmers market greets the customers in Hangzhou City, capital of east China's Zhejiang Province, Oct. 15, 2012. China's Consumer Price Index (CPI), the main gauge of inflation, grew 1.9 percent year on year in September, the National Bureau of Statistics (NBS) announced on Monday. (Xinhua/Han Chuanhao)
BEIJING, Oct. 15 (Xinhua) -- Inflation in the world's second-largest economy saw a mild month-on-month deceleration in September, stirring concerns over whether authorities would further relax monetary policies in the rest of the year to bolster a slowing economy.
The Consumer Price Index (CPI), the main gauge of inflation, grew 1.9 percent year on year in September, the National Bureau of Statistics (NBS) announced Monday. The index eased from a 2-percent rise in August.
Analysts said that slowing growth in food prices and fewer carry-over effects from last year contributed to the slight drop in inflation.
"Price declines on many farm produce items, especially that of vegetables, has led to the slight drop in inflation," said Lian Ping, chief economist at Bank of Communications.
Food prices, which account for nearly one-third of the weighting in the calculation of China's CPI, rose 2.5 percent last month from one year earlier. This was down from the 3.4-percent year-on-year increase in August. Vegetable prices rose 11.1 percent last month, but the growth rate slowed sharply by 12.7 percentage points compared to August.
On a month-on-month basis, CPI in September was up 0.3 percent from the previous month, according to NBS data. The growth rate also marked a decline compared to the 0.6-percent monthly-based increase in August.
China's producer price index (PPI), which measures inflation at the wholesale level, dropped 3.6 percent year on year in September. It marked the seventh straight month of decline since PPI fell in March for the first time since December 2009.
"Monday's data indicated that inflation has been significantly weakened in China. Meanwhile, domestic demand still remained low, which means that further policy loosening is needed in the Chinese economy," said Liu Ligang, an economist with ANZ National Bank Ltd.
According to the NBS, the nation's CPI grew averagely 2.8 percent year on year in the first nine months. Liu said he believes the country is poised to meet the target of keeping inflation under 4 percent for the full year.
Liu said that as inflation lessened and the economy faces downward pressure, cutting banks' reserve requirement ratio (RRR) is still needed to spur the economy, which grew 7.6 percent in the second quarter, marking the slowest pace of growth in more than three years.
The NBS is scheduled to issue an update on GDP data for the third quarter on Thursday.
However, Alaistair Chan, an economist with Moody's Analytics, a division of Moody's Corporation, said that the mild deceleration of inflation in September is unlikely to give the government much scope for further stimulus actions.
Chan noted that inflation in housing and household goods has been resilient, and the likelihood of further interest rate and reserve ratio cuts has been diminished.
The central bank said Saturday that China's M2, which measures cash in circulation and all deposits, rose 14.8 percent year on year in September, marking the highest level since July 2011.
E Yongjian, a researcher with Bank of Communications, also said that it has become less necessary to lower RRR or interest rate than it was during the rest of the year, as M2 growth expanded at a record speed in September and current inflation stands at a low level.
E forecast that monetary policies in the country will remain stable for the rest of the year.
In order to buoy growth, the central bank has cut RRR twice this year. It has also lowered the benchmark interest rates twice.
The analyst said that CPI was unlikely to see a significant rebound in the rest of the year. However, they said that China should be prepared for so-called "imported inflation" caused by a new round of quantitative easing (QE3) by the United States.
"QE3 will lift commodity prices. The price rises will be passed on to China because the country is a huge importer of commodities such as crude oil," said Zhuang Jian, a senior economist with Asia Development Bank.
TOKYO, Oct. 14 (Xinhua) -- Yi Gang, vice governor of the People 's Bank of China, made a speech at the last day of the International Monetary Fund and the World Bank annual meeting Sunday here to explain the monetary policy of China.
Yi stressed that the most important job for central bank is to control inflation. China is developing dramatically, and local governments have desires of pursuing higher growth, so the central bank need to remind the governments the danger of inflation. Full story
BEIJING, Oct. 13 (Xinhua) -- China's central bank governor has urged fending off inflationary risks amid worldwide efforts to shore up the sluggish global economy by easing monetary policies.
Zhou Xiaochuan, governor of the People's Bank of China (PBOC), made the remarks in an article published in the latest issue of the Journal of Financial Research, a magazine published by the PBOC. Full story
GUANGZHOU, June 17 (Xinhua) -- A senior figure with HSBC has predicted that China's consumer inflation will ease to 2.9 percent for 2012, giving sufficient room to decision makers to roll out pro-growth measures.
China's consumer price index, the main gauge of inflation, may retreat further to under 3 percent in June with both prices of food, particularly pork, and non-food items falling, said Qu Hongbin, chief economist at HSBC China and co-head of Asian economic research at HSBC, in a research note issued on Sunday.Full story