China’s consumer inflation accelerates, but industrial prices fall on weak demand

Share your love

The annual rate of Consumer inflation China’s slowed up in December, buoyed by rising food prices, even as domestic demand faltered despite constrained economic activity.

Economists expect inflation to pick up further in the first quarter of 2023.

December’s consumer price index (CPI) was 1.8 percent higher than a year earlier, rising faster than November’s 1.6 percent annual rise, data from the National Bureau of Statistics showed on Thursday. The result matched a Reuters estimate of 1.8%.

The annual fall in the producer price index (PPI) moderated in December to 0.7% from 1.3% in the previous month. Economists in a Reuters poll had expected a 0.1% decline, reflecting industry disruption from a high number of COVID-19 cases towards the end of 2022.

China last month abandoned its strict zero-COVID policy measures, lifting lockdowns, lifting quarantine and ending periodic testing. As a result, economists expect inflation to continue to accelerate in the first quarter.

“There are some early signs that the transition to COVID is starting to push up prices,” says Zichun Huang, an economist at Capital Economics. “But the uptick in inflation is unlikely to be as large as that seen in many other economies in their reopening.”

Analysts do not expect rising inflation to trigger a rise in interest rates.

“With inflation remaining manageable for the foreseeable future, we believe the People’s Bank of China will have to lower the policy rate by 10 basis points in the first quarter,” said Zhou Hao, chief economist at Guotai Junan Group.

Food prices rose 4.8% in December from a year earlier, following November’s 3.7% annual rise.

Read Also   Soup from Biden to Pedro Sánchez

Core inflation, which excludes food and energy prices, remains subdued, although it rose from an annual rate of 0.6% in November to 0.7% last month. This reflects the early effects of reopening in the health and travel sectors, where inflation increased.

The average CPI for all of 2022 was 2.0% higher than in 2021, compared to the Government’s target of a rise of around 3%.

China’s Ministry of Commerce said last week it would study and implement policies to boost consumption and that consumer demand would gradually return after continued optimization of epidemic control and prevention.

At a regular press briefing in Beijing on Thursday, China’s state planner said that while international commodity prices could fluctuate and imported inflationary pressures persisted, China was confident it could keep prices stable this year.

Share your love

Leave a Reply

Your email address will not be published. Required fields are marked *