China’s inflation cooled for the fifth straight month in December, increasing the odds the government will unveil more measures to shore up growth.
Consumer prices rose 4.1 percent from a year earlier, the National Bureau of Statistics said in Beijing today. That compares with the median estimate of 4 percent in a Bloomberg News survey of 26 economists and 4.2 percent in November.
Today’s data may give Premier Wen Jiabao more scope to shift his policy focus to bolstering expansion as Europe’s debt crisis crimps demand for exports and officials sustain a campaign to cool property prices. Imports and exports grew the least in two years last month, excluding seasonal distortions, and a report next week may show the world’s second-largest economy expanded at the slowest pace in 10 quarters in the last three months of 2011.
“Inflation is set to moderate further in coming months and be less of a concern, paving the way for more policy easing as economic growth slows,” Chang Jian, a Hong Kong-based economist at Barclays Capital Asia Ltd., said before today’s release. Chang expects four reductions in banks’ reserve requirement ratio this year to encourage lending and estimates inflation may slow to less than 3.5 percent by the second quarter.
For the whole of 2011, consumer prices gained 5.4 percent, exceeding the government’s target of 4 percent set at the beginning of the year. Policy makers haven’t yet published an inflation goal for this year. Economists’ forecasts released last month ranged from as low as 2 percent at Standard Chartered Plc to 4.4 percent at Credit Suisse Group AG.
Food Supplies
Inflation may see a “one-off” rebound this month amid increased consumer spending before the Chinese Lunar New Year holiday and winter disruptions to the food supply, according to Lu Ting, a Hong Kong-based economist at Bank of America Corp. Wholesale prices of 18 vegetables tracked by the Ministry of Commerce continued to climb in the first week of January from the previous seven days, after rising throughout December, according to government data.
Easing global commodity prices have helped cool raw material costs in China, the world’s largest consumer of iron ore and copper. Producer prices rose 1.7 percent in December from a year earlier, today’s report showed. That compares with a median estimate of 1.7 percent in a Bloomberg survey and a gain of 2.7 percent the previous month.
Prices Too High
While controlling inflation is not as urgent a task as it was last year, stabilizing consumer prices is still high on the government’s agenda and efforts to rein in excessive gains won’t be relaxed, People’s Bank of China Governor Zhou Xiaochuan said in interviews with Caixin magazine and the Xinhua News Agency over the past two weeks. More than two thirds of households in a central bank survey last month said prices are too high.
Factory workers from lingerie maker Top Form International Ltd.’s Shenzhen plant to Pangang Group Chengdu Steel Vanadium & Titanium Co. in western China have gone on strike for higher pay in the past two months. LG Display Co. (034220), agreed to double year- end bonuses last month in east China’s Nanjing plant after more than 2,000 workers took part in a protest, state-run Xinhua News Agency reported Dec. 29.
