Free Newsletters - Space - Defense - Environment - Energy - Solar - Nuclear
by Staff Writers
Beijing (AFP) April 9, 2013
Inflation in China slowed faster than expected in March, official data showed Tuesday, indicating that the recovery in the world's second-largest economy is still weak.
The news will allow the central People's Bank of China to hold off tightening monetary policy further for the time being, boosting share markets, analysts said, but they warned problems remained for the economy.
China's consumer price index (CPI) -- a main gauge of inflation -- came in at 2.1 percent last month, the National Bureau of Statistics (NBS) said, down from 3.2 percent in February when prices spiked during the Lunar New Year holiday.
Last month's reading was lower than the median forecast of 2.4 percent in a poll of 16 economists by Dow Jones Newswires.
The easing CPI figure and a 1.9 percent fall in the producer price index, a leading indicator showing how much manufacturers are paying, underscored that recovery in China remained fragile, analysts said.
"We have yet to see a surge in final demand ripple throughout the economy," IHS Global Insight analysts Alistair Thornton and Ren Xianfang said in a research note.
"The recovery... has been largely government-driven, and has been underpinned by property froth and rampant shadow finance... This is not a healthy recovery."
Month on month CPI fell 0.9 percent, the NBS said. In the first three months of the year inflation stood at 2.4 percent year-on-year, it added.
Food prices remained a leading driver of inflation in March, rising 2.7 percent year on year, although easing from a 6.0 percent increase in February.
The cost of pork declined 5.5 percent from a year ago, apparently as consumers turned away from the meat after more than 16,000 dead pigs were found in a river that flows through Shanghai.
The scandal highlighted China's troubles with food safety, adding the country's most popular meat to a growing list of food items rocked by controversy.
China has set its inflation target for this year at 3.5 percent, lower than last year's goal of 4.0 percent but higher than the final rate for 2012, which stood at 2.6 percent.
Bank of America Merrill Lynch economists said they expect inflation to remain below 3.0 percent before mid-year, adding that concerns were overdone after price rises hit a 10-month high in February.
"Calling for imminent monetary tightening in the past month also turns out to be premature as inflation pressure is not high, growth momentum is not strong and external conditions are still volatile," said Lu Ting and Zhi Xiaojia in a report.
Beijing is expected to keep its monetary policy neutral in the first half of this year after an easing in the last six months of 2012 to boost growth, they said.
Traders welcomed the data, with the Shanghai composite index 0.44 percent higher and Hong Kong up 0.92 percent.
Chinese shares have suffered in recent months owing to concerns about the world's number two economy, while the recent spike in inflation fuelled expectations the government would tighten monetary policy to prevent runaway prices.
Inflation is a key issue for the ruling Communist Party as it brings with it the risk of popular discontent and the threat of social unrest.
The Chinese economy grew at its slowest pace in 13 years in 2012, with gross domestic product expanding 7.8 percent in the face of weakness at home and in key overseas markets. Its target for 2013 is 7.5 percent, the same as last year.
China's President Xi Jinping said Monday the days of "ultra-high speed" growth in the economy -- which many hope can spur a global recovery -- are probably over, partly as a result of official efforts to transform the country's growth model.
Chinese leaders have repeatedly vowed to retool the economy to emphasise consumer demand as the key growth driver rather than investment and exports.
|The content herein, unless otherwise known to be public domain, are Copyright 1995-2014 - Space Media Network. AFP, UPI and IANS news wire stories are copyright Agence France-Presse, United Press International and Indo-Asia News Service. ESA Portal Reports are copyright European Space Agency. All NASA sourced material is public domain. Additional copyrights may apply in whole or part to other bona fide parties. Advertising does not imply endorsement,agreement or approval of any opinions, statements or information provided by Space Media Network on any Web page published or hosted by Space Media Network. Privacy Statement|