China’s factory gate inflation cooled to a more provided that rate in January and consumer price growth also relaxed, official data showed Wednesday, amid the weakening property sector demand, new curbs the coronavirus and government effort to brake in surge materials costs.
The producer price the index (PPI) increased by 9.1% compared to year previously, the Office national of Statistics (NBS) says in a statement, slower than 9.5% growth tipped by Reuters poll and 10.3% gain in December. It was the weakest pace since July.
While producer prices in the world is second-most grand economy remain raised thanks to critical supply problems and home and abroad, China’s relatively benign consumer inflation contrasts with cost observed pressures in most other economies.
Policies to ensure provide and price stability were “vigorously encouraged” to ease the pressure of rising oil and commodity prices in international markets, NBS’ senior says statistician Dong Lijuan in A declaration.
Analysts say cooling inflation could give space for the people’s bank of China (PBOC) to ease policy at support the slowing economy even as major central banks tighten elsewhere policy.
“He is little probable inflation concerns persist back the (People’s Bank of China) of more policy easing measures,” said Sheana Yue, China economist at Capital Economics.
chinese consumer price index (CPI) inch up 0.9% last month from a year earlier. Economists in a Reuters poll had predicted a 1% rise after a 1.5% increase in December.
“The fall in inflation reflects the weakness demand”, said Zhiwei Zhang, chief economist at Pinpoint Asset Management. “Macroeconomic policies have become more solidarity but it takes time for the impact to be transmitted to the economy.”
He also says that “the slowdown in the property cycle and epidemics of COVID-19 in several cities have curbed economic activities.”
The Chinese economy in particular son vast manufacturing sector, has struggled with high production costs due to global energy price.
In January, prices for coal mining and washing jumped 51.3% year-over-year and prices for oil and gas extraction jumped 38.2%.
Promise to keep prices under control
China’s state planner said earlier this month global inflation is likely to persist for some time, but expressed confidence in that of the country ability To do face with unnatural price fluctuation.
The National Development and Reform Commission (NDRC) said it expects producers price inflation to further slow this year while the consumer price inflation peaks up.
Dong said consumer prices remain broadly flat ahead of Lunar New Year holidays.
the official the data followed a warning on Premier Li Keqiang’s inflation on Monday at a meeting of the Council of State.
“We are confident and capable of to fight inflation, but we must remain on alert,” he said, according to the official Xinhua news agency.
“If inflation occurce would be cause a major impact on the society. Therefore, it is crucial to ensure supply and keep prices stable.
The Xinhua report on the meeting said the government will make efforts to ensure food and energy security, including increasing of coal supply and support for coal-fired power plants for run at full capacity.
Luxury at ease
The PBOC cut interest rates and pumped cash in the financial system to reduce borrowing costs, with more relaxation steps expected.
the drop in inflation opens the room for any further policy easing, Zhiwei said, adding that the additional interest rate on can expect outages in the coming months.
Capital Economics’ Yue expects news policy rate cuts before the middle of the year.
Room for maneuver is a rare luxury enjoyed by China, in contrast with developed central banks, which have started to raise interest rates or whose on generally expect them to year.
At the same time, policy makers are wary of easing credit conditions too much and too fastwhich could revive speculation spikes in property prices.
the property the area cooled to cause borders on borrow by developers and increasingly wary buyers.
“On the interests rate cuts, policy makers do not want to undo all results they reached last year in the property market“said Nie Wen, chief economist at Hwabao Trust.
“They finally managed to curb the fast-rising (property), so any interest rate cuts will be structural and will be aimed at supporting the real economyrather than further stimulating the property market.”