Consumer inflation at 6-year low in 2015
Print Edition
CHINA still has room to ease its monetary policy as inflation for the whole of 2015 fell to its lowest level for six years, despite accelerating in December due to higher food costs, according to economists.
Liu Ligang, chief China economist at Australia & New Zealand Banking Group, said further monetary policy easing is needed to tackle deflationary risks.
“The modest uptrend of the CPI in the past two months could be transitory,” Liu said. “Given the intensifying drop of oil prices in January, the factory-gate prices are likely to keep falling and make deflationary pressures persist.”
In December, the consumer price index, the main gauge of inflation, rose 1.6 percent year on year, accelerating from increases of 1.5 percent in November and 1.3 percent in October, the National Bureau of Statistics said on Saturday.
The pickup was largely a result of faster growth in food costs — which account for nearly a third of the items that make up the CPI basket — which grew 2.7 percent in December, following an increase of 2.3 percent a month earlier, the bureau said. Prices in the non-food sector rose 1.1 percent, flat with the previous month.
For the whole of last year, consumer prices rose 1.4 percent year on year, their slowest rate since 2009, and far below the government’s target of 3 percent.
Meanwhile, the producer price index, a measure of inflation at the factory gate and a pointer to future consumer prices, fell 5.9 percent year on year in December, unchanged from November and extending the downward trend to a 46th month. The index lost 5.2 percent for the whole of last year.
Deflationary pressure
Zhu Haibin, chief economist for China at JP Morgan, said the long-standing negative growth in prices at the factory gate is a major source of deflationary pressure.
ANZ’s Liu said the central bank might lower the reserve requirement ratio it sets for lenders by 2 percent and cut lending facility rates by at least 1 percent this year to deal with the deflationary risks.
The People’s Bank of China cut interest rates five times last year, as well as cutting the reserve requirement the same number of times to give banks more capital at hand.
Bloomberg economist Tom Orlik said with headline CPI now edging up for two months in a row and non-food prices stable, concerns about deflation in the producer sector creeping into the consumer sector might ease somewhat. But he warned that an unchanged PPI reading suggests December’s industrial output could continue to languish, already struggling with a higher base for comparison at the end of 2014.
China’s gross domestic product in the third quarter of last year rose 6.9 percent year on year, its slowest rate since the aftermath of the global financial crisis in 2009.
The National Bureau of Statistics is scheduled to release the growth rate for the whole of last year on January 19.
Earlier data showed further stabilization in China’s economy. The official purchasing managers’ index, a gauge reflecting operating conditions in largely state-owned manufacturing companies, rose 0.1 point month on month in December to 49.7. The official non-manufacturing PMI, a counterpart for the services sector, improved to 54.4 last month.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
