Saturday 19 April 2014
 
»
 
»
Story

China inflation fall to 6.2pc as growth slows

Beijing, September 10, 2011

China said its politically sensitive inflation rate softened in August, but analysts warned that price pressures would continue to trouble the government just as world demand slackens.

The National Bureau of Statistics (NBS) also said output from China's factories and workshops rose 13.5 per cent year-on-year in August - slower than in July - amid concerns the economy is slowing while prices rise.

Authorities in the world's second-largest economy have been struggling to tame inflation, which they fear could cause more unrest after recent public protests as living costs spike for many millions.

The NBS said the consumer price index (CPI) - the main gauge of inflation - rose 6.2pc in August, down from 6.5pc in July.

The government has implemented a number of measures over the past year to try to slow inflation, including restricting the amount of money banks can lend and raising interest rates five times since October.

Analysts said these policies appeared to have had an impact, but warned that inflation - while expected to drop - was still likely to remain elevated.

"We are assured it is a peak for this year but any falling back would be very slow," said Societe Generale economist Yao Wei.

"CPI is likely to stay above 5pc for a long period of time, which is not good news for the central bank."

The government had originally set a target of 4pc for inflation in 2011, but China's Premier Wen Jiabao has reportedly admitted it will be difficult to keep CPI within that target.

He said that fighting rising prices remained a priority and hoped to bring the level under 5pc with "hard work".

Foodstuffs account for more than one-third of the monthly spending of the average Chinese consumer. According to the NBS, year-on-year food price rises in August slowed to 13.4pc from 14.8pc the previous month.

"Overall, we expect price pressures to ease over the next three to six months," Royal Bank of Canada senior emerging markets strategist Brian Jackson said.

"But today's is only one month's data. Inflation could bounce back. There's a chance they might tighten policy further if inflation doesn't slow as fast as they'd like."

Other data released yesterday showed retail sales, the main gauge of consumer spending, jumped 17pc in August, slower than July's 17.2pc rise.

Fixed asset investment, a measure of government spending on infrastructure, rose 25pc in the first eight months of 2011, compared to a 25.4pc increase for January to July this year.-Reuters




Tags: inflation | China | growth | Fall |

More INTERNATIONAL BUSINESS Stories

calendarCalendar of Events

Ads

Buy high quality China wholesale Health & Beauty , Electronics, Sports & Outdoors , Computers, Video Games, Toys & Hobbies Cell Phones, Automobiles and other wholesale products directly from reliable Chinese wholesalers or Factories on DHgate.com