Tuesday, February 10, 2009
·China's CPI, a major gauge of inflation, went up 1.0% year-on-year in January this year.
·The rise rate was 0.2 percentage points lower than the previous month.
·In January, the PPI, another measure of inflation at the wholesale level, went down 3.3%.
Citizens pick fruit at a supermarket in Hefei, capital of east China's Anhui Province, Feb. 10, 2009. China's consumer price index (CPI), a major gauge of inflation, went up 1.0 percent year-on-year in January this year, the National Bureau of Statistics said on Tuesday. (Xinhua/Li Jian)
BEIJING, Feb. 10 (Xinhua) -- China's consumer price index (CPI), a major gauge of inflation, rose by 1 percent in January over the same month last year, the National Bureau of Statistics announced Tuesday.
The rise was 0.2 percentage points lower than the previous month.
In January, the producer price index (PPI), another measure of inflation at the wholesale level, dropped 3.3 percent. The decline was 2.2 percentage points above the December level.
Tighter money supply and quickly falling demand helped ease inflationary pressure, said Li Huiyong, chief macro-economic analyst with brokerage firm Shenyin-Wanguo.
Inflation was a major concern in China at the beginning of 2008,but as monetary policy tightened at the end of 2007, the CPI started to slow last May after peaking at 8.7 percent in February. The inflation index fell to 1.2 percent in December, the slowest since July 2006.
The PPI dropped 1.1 percent in December after rising 2 percent in November, and hit a 12-year-high of 10.1 percent in August.
"Given a time-lag effect, January CPI and PPI data reflect the economic slowdown last year," said Zuo Xiaolei, chief economist with Galaxy Securities.
In January, the CPI was up 0.9 percent from the December level, with food prices up 3.3 percent on the previous month.
Zuo estimated the indices would continue downward for the first quarter of this year, increasing deflationary pressure. She also predicted low inflationary pressure this year.
Zhuang Jian, senior economist with the Asian Development Bank's China resident mission, agreed the deflationary pressure would be short-term, with the deceleration of the CPI continuing into March.
However, Zhang Liqun, a researcher with the Development Research Center of the State Council, said deflationary pressure had stopped in China as the month-on-month price changes indicated the economy had bottomed out.
Zhang predicted China's annual economic growth would speed up, but commodity prices would be unlikely return to the levels of the first half of last year, when there was excess liquidity and heavy international speculation on futures.
According to the statistical bureau, January saw the CPI rise 0.7 percent in urban areas and up 1.5 percent in rural areas.
Food prices, which account for around a third of the CPI, went up 4.2 percent, while non-food prices were down 0.6 percent.
Meat and related products were priced 2.8 percent lower, fresh vegetables 19.6 percent higher, and eggs, 1.3 percent higher.
In terms of PPI, prices of production materials were down 4.4 percent from a year ago, but living materials prices up 0.1 percent.
Crude oil prices at the factory gate slumped 49.9 percent, with prices of diesel down 4.8 percent and those of gasoline and kerosene up 2.1 percent and 3.1 percent respectively.
But prices of mined coal went up 22.7 percent, and raw coal prices up 12.3 percent.
Zhuang Jian said Chinese manufacturers had exhausted their excess inventories, and they would purchase more equipment in coming months to expand production with the government economic stimulus package. With foreseeable stronger demand, the CPI would likely pick up at the end of March or the beginning of April.
He said it was not imperative for the central bank to lower interest rates again as money supply and credit extension had already accelerated.
Zuo Xiaolei said if government macro control policies were implemented properly, China would avoid hyper deflation this year.