China consumer inflation creeps up in Nov – govt


BEIJING: China’s consumer inflation rate edged up in November, official data showed on Wednesday, while factory gate price falls lingered at a six-year low as the world’s second-largest economy grapples with slowing growth.

The consumer price index (CPI) — a main gauge of inflation — rose 1.5 percent last month from a year ago, the National Bureau of Statistics (NBS) said in a statement.

It edged up from October’s 1.3 percent and was slightly above a median forecast of a 1.4 percent gain in a Bloomberg survey of economists.

Moderate inflation can be a boon to consumption as it pushes buyers to act before prices go up, while falling prices encourage shoppers to delay purchases and companies to put off investment, both of which can hurt growth.

But economists expected Chinese deflationary pressures to increase next year due to subdued domestic demand and low commodity prices.

Chinese inflation was unlikely to pick up significantly in the near future, ANZ economists said in a note, “on the back of overcapacity, falling commodity and energy prices, and weak domestic demand.”

China’s economy is crucial to the rest of the world and investors are worried about its outlook.

The producer price index (PPI), which measures prices of goods at the factory gate, fell 5.9 percent year-on-year in October, matching the figures for the previous three months, which represented a six-year low.

Overcapacity in manufacturing has been a major drag on China’s growth and the protracted declines in PPI bode ill for industrial prospects.

Slowing economy
Consumer inflation has been at or below 2.0 percent for all of 2015 — well below Beijing’s target of an increase of “around three percent” for the year — while the drop in PPI, a leading indicator for CPI, was the 45th consecutive monthly fall.

The inflation data came on the heels of poor trade figures released Tuesday for November, when exports and imports both fell for the fifth month in a row.

The Chinese economy expanded 6.9 percent in the July-September period according to official figures, its slowest rate since the aftermath of the global financial crisis and weakening further from 7.0 percent in each of the first two quarters.

But those statistics are widely doubted and many analysts believe the real rate of growth could be several percentage points lower.

Beijing is seeking to transition the country’s growth model away from reliance on exports and fixed-asset investment towards a consumer-driven economy, but the reform is proving bumpy.

Growth hit a 24-year low of 7.3 percent in 2014 and President Xi Jinping said last month that annual expansion of only 6.5 percent would be enough to meet the government’s goals, the clearest signal yet Beijing will lower its growth targets for the coming years.

The government has turned to monetary loosening to stimulate the economy, cutting interest rates six times since November last year.

Analysts with Chinese investment bank CICC said authorities have “ample room” for further easing measures to prop up prices and growth.

“Continued deflationary pressure in manufacturing prices calls for further monetary easing, more importantly, fiscal policy will have to pull more weight towards stabilizing growth,” they said in a report.



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