Subscribe free to our newsletters via your
. Earth Science News .

China's 2012 inflation rate slows, but risks seen rising
by Staff Writers
Beijing (AFP) Jan 11, 2013

China's inflation rate slowed sharply in 2012, official data showed Friday, but analysts warned of increasing price risks this year that may limit scope for measures to boost economic growth.

The country's consumer price index (CPI), a main gauge of inflation, rose 2.6 percent in 2012, the National Bureau of Statistics (NBS) said, down from 5.4 percent the year before.

The annual inflation figure was also lower than the government's target of 4.0 percent, signalling that prices remained well under control last year.

Inflation stood at 2.5 percent year-on-year in December, the NBS said, the second straight month that the reading rose and the highest since May, when it hit three percent.

Rising food prices, particularly for vegetables due to unusually cold weather, were the major contributor to the December increase, according to the bureau.

The benign inflation environment came as China's economic expansion slowed during the first nine months of the year, with GDP growth of 7.4 percent in the three months to the end of September -- the worst in more than three years.

But data for the final three months of the year, including manufacturing, broader industrial output and retail sales, have spurred optimism among economists that growth accelerated in the fourth quarter.

However, the fact that CPI was surging on food price spikes would limit leeway for policymakers -- who are sensitive to the risk of inflation leading to social unrest -- to take further easing measures to spur economic growth, analysts said.

"The central bank is concerned about underlining inflationary pressures and it is one reason they have not cut more aggressively," said Ben Simpfendorfer, managing director of Hong Kong-based economic consultancy firm Silk Road Associates.

"So the biggest risk is this is actually a restraint on policy makers' ability to support the economy, either through rate cuts or through more stimulus," he told AFP.

Policymakers cut interest rates twice last year and trimmed the amount of cash banks must place in reserve three times from December 2011 in a bid to encourage lending and pump up economic growth.

Yao Wei, an economist with Societe Generale in Hong Kong, said that the increase in China's sub-index of housing inflation to three percent last month from 2.6 percent in November, may increase policy uncertainties.

The reading -- a key barometer of the country's property market -- covers leasing and decoration costs, but excludes purchase prices, according to the NBS definition.

"The central government may come under pressure to tighten controls on the property market once the sector shows signs of heating up, which will definitely affect the pace of the overall economic recovery," she said.

The government has sought to curb property speculation for the past two years, with measures including restrictions on second and third home purchases, higher minimum downpayments, and annual taxes in some cities on multiple and non-locally-owned homes.

The moves cooled the once red-hot market, but demand remains pent-up and government monetary policy has eased in recent months.

China releases fourth-quarter GDP figures next Friday.


Related Links
The Economy

Comment on this article via your Facebook, Yahoo, AOL, Hotmail login.

Share this article via these popular social media networks DiggDigg RedditReddit GoogleGoogle

Memory Foam Mattress Review
Newsletters :: SpaceDaily :: SpaceWar :: TerraDaily :: Energy Daily
XML Feeds :: Space News :: Earth News :: War News :: Solar Energy News

Japan premier unveils $226.5 bn stimulus package
Tokyo (AFP) Jan 11, 2013
Japan's new government unveiled a $226.5 billion stimulus plan Friday in the latest bid to boost the world's number three economy, with plans to rebuild disaster-hit areas and beef up the military. Japanese investors welcomed the news, with the Nikkei index surging to a 22-month high and the yen tumbling, but some analysts questioned its long-term effect and warned it could lead to more mise ... read more

EU grants Haiti fresh aid on quake anniversary

Years after quake, Haitian homeless feel abandoned

Obama signs $9.7 bn aid bill for Sandy victims

Obama considers broad arms sales restrictions: report

How the kilogram has put on weight

Japan to survey Pacific seabed for rare earth

3D printing creates 'virtual' fossil

LEON: the space chip that Europe built

Interagency Report Published on Information Required for Short-Term Water Management Decisions

Heat-resistant corals provide clues to climate change survival

Baby sharks stay still to avoid being detected by predators

Genetics clues to survival of coral reef

A new approach to assessing future sea level rise from ice sheets

A New Way to Study Permafrost Soil, Above and Below Ground

Bering Sea study finds prey density more important to predators than biomass

Fiennes sails for Antarctica on first winter crossing bid

KFC parent company sorry over China chicken scare

Report: World wastes half of its food

Invading species can extinguish native plants despite recent reports

Bugs need symbiotic bacteria to exploit plant seeds

Malawi floods kill three, displace thousands

Red-dust sunset as west Australia braces for cyclone

Russian volcano erupting with gas, ash

Rains bring flood havoc, drought relief to desert Jordan

Foreign troops arrive in Mali: witnesses

Zambia bans lion, leopard hunting

No C.Africa deal in sight as rebels demand president quit

NATO says no Mali plans, Compaore urges talks

Eliminating useless information important to learning, making new memories

Tech world crawling into the crib

Promising compound restores memory loss and reverses symptoms of Alzheimer's

Dopamine-receptor gene variant linked to human longevity

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