China's consumer price index (CPI) rose 1.3 percent last month, official data showed yesterday, ticking up slightly from October amid rising fuel and water prices but not enough to dispel deflationary pressures.
November's inflation was slightly up from October's 1.2 percen, while for the first 11 months of the year, the CPI was up 1.8 percent, the National Bureau of Statistics said in its monthly report.
Urban CPI was up 1.3 percent year-on-year, while rural inflation climbed 1.4 percent.
Prices for household equipment and household repair services were up only 0.5 percent during the month, while prices for durable goods fell by 0.3 percent, the bureau said, reflecting weak consumer demand.
"It is not surprising at the moment that CPI continues to remain low," BNP Paribas economist Chen Xingdong (
"It is within expectations, but 1.3 percent is definitely not good news for both downstream and upstream producers because low CPI means profit is squeezing."
The figures reflect little change in China's consumption demand, which in turn means little change on the supply side.
As demand continues to lag supply, the subsequent overcapacity becomes a major factor behind the slowdown in inflation, Chen said.
"Deflation is definitely a major concern," Chen said.
He said deflation pressure was coming from industrial sectors rather than food and oil, sectors where prices are surging.
Chen added that deflationary pressures may worsen in the coming year.
China's CPI growth for the full year is likely to be around 2.0 percent, while for 2006 inflation will be closer to 2.5 percent, Chen said.
According to the statistics bureau, transport and telecommunications prices fell 0.3 percent in November.
Prices for telecommunications equipment were down 14.6 percent, and transport equipment costs fell 1.8 percent.
China's Premier Wen Jiabao (
China raised gasoline prices in July for the fifth time this year, and electricity charges were boosted in May.
Prices for vehicle fuel and spare parts were up 10.4 percent in November, the bureau said.
Household water, electricity and fuel prices were up 7.4 percent during the month, it added.
Water prices throughout the nation were also rising, especially in northern China where severe water shortages are affecting many urban centers.
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