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Xinhua Insight: China's CPI inflation eases, favorable to policymakers

English.news.cn   2014-01-09 16:02:32            

A seller arranges cooking oil at a supermarket in Shijiazhuang, capital of north China's Hebei Province, Jan. 8, 2013. China's consumer price index (CPI) grew 2.5 percent year on year in December, and 2.6 percent for the whole of 2013, well below the government's full-year target of 3.5 percent, the National Bureau of Statistics (NBS) said Thursday. December's CPI, a main gauge of inflation, was 0.5 percentage points lower than the previous month. (Xinhua/Mou Yu)

BEIJING, Jan. 9 (Xinhua) -- Thursday's figures showed China's consumer price index (CPI) inflation rose lower than expected in December to a seven-month low.

December's CPI -- a main gauge of inflation -- rose 2.5 percent year on year, down from 3 percent in November and 3.2 percent in October, the National Bureau of Statistics (NBS) said.

Analysts maintained that falling CPI readings and modest inflation pressure will allow policymakers to continue focusing on policies to support growth while implementing structural reform measures this year.

Lower inflation might give the People's Bank of China (PBOC, central bank) some room to ease the liquidity situation and to tame rising interbank lending rates, they said.


According to NBS, last month's inflation was 2.5 percent in both cities and rural areas. Food prices, which account for roughly a third of CPI, rose 4.1 percent in December from a year ago, while non-food products edged up 1.7 percent.

In the category of food, fruit, aquatic products, grain, pork, beef, mutton, milk and fresh vegetables all rose year on year in December. Fruit prices led the charge by jumping 15.6 percent from a year ago. Both egg and edible oil prices contracted by 4.1 percent year on year.

Rents went up 4.7 percent year on year last month. Prices of telecom equipment dropped notably by 6 percent from a year ago.

On a month-to-month basis, December CPI edged up slightly by 0.3 percent from November. Food prices increased 0.6 percent from November while prices of non-food products were up 0.1 percent.

For the whole of 2013, CPI inflation averaged 2.6 percent year on year, unchanged from 2012, and well below the government's target of 3.5 percent which was published in March of 2013, according to the NBS.

The producer price index (PPI), which measures inflation at the wholesale level, fell 1.4 percent year on year in December. Annualized PPI for 2013 fell 1.9 percent year on year, NBS data showed.

Lu Ting and Zhi Xiaojia, China economists with Bank of America Merrill Lynch, said December CPI inflation fell more than expected to 2.5 percent year on year, lower than market expectations of 2.7 percent.

The lower-than-predicted CPI was due to lower food inflation, as this fell to 4.1 percent from 5.9 percent in November, Lu and Zhi said in a research note.

Notably, fresh vegetable price inflation slumped to 2.6 percent in December from 22.3 percent in November, contributing eight basic points to the 2.5-percent CPI in December, compared to 59 basic points to the 3-percent CPI in November, they said.

Meat price inflation fell to 3.6 percent year on year from 5.5 percent in November. Within the meat category, pork price inflation dropped to 1.6 percent from 5 percent the previous month.

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Editor: Bi Mingxin
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