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High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. Chinese inflation falls in August to 6.2% - FT.com
Chinas consumer inflation slowed in August from a three-year high in July as government attempts to rein in surging prices began to take effect.
Most economists said inflation had likely peaked as the countrys consumer price index rose 6.2 per cent in August from a year earlier, compared with a 6.5 per cent rise in July, according to figures released Friday by the National Bureau of Statistics.
The more moderate rise in prices was accompanied by further signs of a modest slow-down in Chinese economic growth, which is expected to be about 9 per cent for the year, down from a 9.6 per cent rise in the first half
The inflation data will be welcome news to policymakers in Beijing, who have been trying to slow potentially destabilising price rises without stalling the strong growth that underpins the legitimacy of the ruling Communist party.
In a particularly welcome development, food price rises volatile and politically sensitive slowed to 13.4 per cent in August compared with a year earlier, and down from a 14.8 per cent rise in July. This was mostly thanks to a slower increase in pork prices.
More
On this story
No miracle cure for Chinese inflation
Britain and China strengthen relations
Chinese strive to secure soft landing
Asian banks hold rates amid growth concerns
Lex Chinas growth puzzle
The price of pork rose 1.3 per cent in August from July, well down from the 7.7 per cent month-on-month rise in July and an 11 per cent increase in June.
The July CPI figure likely marked the peak in the latest inflation upturn and the headline CPI inflation rate is likely to moderate further, especially going into the fourth quarter, said Grace Ng, an economist at JP Morgan.
The moderation in global commodity prices, on the back of growing concerns about the global growth outlook, will further reinforce the easing trend in Chinas pipeline inflation pressure.
But the figures suggested that the era in which China enjoyed very high growth coupled with very low inflation is over and Beijing will have to endure higher structural inflation and sacrifice some growth in order to keep the economy going.
Since last October, Beijing has raised interest rates five times and increased the portion of deposits that banks must hold in reserve nine times in an attempt to bring down inflation.
The economy has responded with a moderate slowdown that analysts say has all the hallmarks of a soft landing.
In August, annual industrial production growth slowed to 13.5 per cent from 14 per cent in July, while fixed asset investment grew about 23 per cent compared with August last year, down from 25 per cent in July.
Chinese officials are closely watching developments in Europe and the US, its largest export markets, and after nearly a year of monetary tightening Beijing has the ability to loosen policy if it feels it needs to provide a boost to growth.
As long as inflation is contained they can flick a switch and inject hundreds of billions of Rmb into the economy if they need to, said Stephen Green, chief economist for greater China at Standard Chartered.
link
Chinese inflation falls in August to 6.2% - FT.com
---------- Post added at 11:57 PM ---------- Previous post was at 11:56 PM ----------
This is good new
Chinas consumer inflation slowed in August from a three-year high in July as government attempts to rein in surging prices began to take effect.
Most economists said inflation had likely peaked as the countrys consumer price index rose 6.2 per cent in August from a year earlier, compared with a 6.5 per cent rise in July, according to figures released Friday by the National Bureau of Statistics.
The more moderate rise in prices was accompanied by further signs of a modest slow-down in Chinese economic growth, which is expected to be about 9 per cent for the year, down from a 9.6 per cent rise in the first half
The inflation data will be welcome news to policymakers in Beijing, who have been trying to slow potentially destabilising price rises without stalling the strong growth that underpins the legitimacy of the ruling Communist party.
In a particularly welcome development, food price rises volatile and politically sensitive slowed to 13.4 per cent in August compared with a year earlier, and down from a 14.8 per cent rise in July. This was mostly thanks to a slower increase in pork prices.
More
On this story
No miracle cure for Chinese inflation
Britain and China strengthen relations
Chinese strive to secure soft landing
Asian banks hold rates amid growth concerns
Lex Chinas growth puzzle
The price of pork rose 1.3 per cent in August from July, well down from the 7.7 per cent month-on-month rise in July and an 11 per cent increase in June.
The July CPI figure likely marked the peak in the latest inflation upturn and the headline CPI inflation rate is likely to moderate further, especially going into the fourth quarter, said Grace Ng, an economist at JP Morgan.
The moderation in global commodity prices, on the back of growing concerns about the global growth outlook, will further reinforce the easing trend in Chinas pipeline inflation pressure.
But the figures suggested that the era in which China enjoyed very high growth coupled with very low inflation is over and Beijing will have to endure higher structural inflation and sacrifice some growth in order to keep the economy going.
Since last October, Beijing has raised interest rates five times and increased the portion of deposits that banks must hold in reserve nine times in an attempt to bring down inflation.
The economy has responded with a moderate slowdown that analysts say has all the hallmarks of a soft landing.
In August, annual industrial production growth slowed to 13.5 per cent from 14 per cent in July, while fixed asset investment grew about 23 per cent compared with August last year, down from 25 per cent in July.
Chinese officials are closely watching developments in Europe and the US, its largest export markets, and after nearly a year of monetary tightening Beijing has the ability to loosen policy if it feels it needs to provide a boost to growth.
As long as inflation is contained they can flick a switch and inject hundreds of billions of Rmb into the economy if they need to, said Stephen Green, chief economist for greater China at Standard Chartered.
link
Chinese inflation falls in August to 6.2% - FT.com
---------- Post added at 11:57 PM ---------- Previous post was at 11:56 PM ----------
This is good new
