China’s inflation rate dropped to 2 percent year-on-year last month, down from 2.5 percent in January, the government said yesterday, prompting economists to warn that the risk of deflation was rising.
The consumer price index (CPI) figure announced by China’s National Bureau of Statistics (NBS) matched the median forecast in a poll of 13 economists by Dow Jones Newswires.
The producer price index (PPI), which measures costs for goods at the factory gate, declined by 2 percent last month, accelerating from January’s 1.6 percent fall, the NBS said.
Economists from ANZ bank wrote in an analysis that the PPI had been negative for two years and “the risk of deflation is rising in the near term.”
The inflation statistics came a day after Customs said that China recorded an unexpected trade deficit of US$22.98 billion for last month.
“Yesterday’s trade figures also reinforced the view that China’s growth momentum continues to slow down,” the ANZ economists said, adding that consumption over the Lunar New Year holiday period had been soft, “partly due to fiscal austerity and anti-corruption efforts by the Chinese authorities.”
“GDP growth in the first half of 2014 will likely be below 7.5 percent, which could trigger further policy easing over the foreseeable future,” they said.
Food prices — which often increase during the Lunar New Year, which fell mostly during last month this year — went up by only 2.7 percent, the NBS said, although the figure included wide variations, with pork prices falling 8.7 percent, while fresh fruit went up 19.7 percent.
China’s CPI, a main gauge of inflation, rose by 2.6 percent last year, unchanged from 2012 and well below the 3.5 percent target set by the government in the world’s second-biggest economy.
Chinese Premier Li Keqiang (李克強) set a target of “about 7.5 percent” for growth this year in a speech to China’s National People’s Congress last week, while leaving an unchanged inflation goal for this year.
Inflation in China has slowed markedly since 2011, when annual CPI spiked to 5.4 percent, and maintaining growth in the face of domestic and overseas economic woes has since become a higher priority for Beijing.
NEW CONSIDERATIONS: An airline manager said the idea is tempting, as demand for air cargo is strong, but issues such as training loaders would need to be addressed Taiwanese airlines might repurpose passenger jets to carry cargo in their cabins to offset lost revenue amid the COVID-19 pandemic. Airlines are considering applying to the Civil Aeronautics Administration (CAA) for permission to transport cargo in passenger cabins after StarLux Airlines Co (星宇航空) last month became the first among the nation’s airlines to offer cargo-only flights using the normal cargo holds of its three Airbus SE A321neo passenger jets. “We are considering whether to increase our capacity by putting cargo on passenger seats,” Starlux spokesman Nieh Kuo-wei (聶國維) told the Taipei Times by telephone. “The advantage is that we can improve revenue,
GLOBAL CUTS: CEO Warren East said the firm’s focus was on strengthening financial resilience, so it would likely reduce salary costs by at least 10% this year Rolls-Royce Holdings PLC is scrapping its targets and final dividend to shore up its finances as the British aero-engine maker’s customers around the world ground planes due to the COVID-19 pandemic. Rolls-Royce, one of Britain’s most historic industrial names, which before the pandemic struck was trying to emerge from a multiyear turnaround plan, has suspended its dividend for the first time since 1987. The company’s engines power Airbus SE and Boeing Co’s widebody jets, but more than 60 percent of that fleet is now grounded, according to aviation data provider Cirium. Rolls-Royce is paid by airlines based on how many hours they fly. Over
PAINFUL CONTRACTION: Passenger loads in February on flights between Taiwan and China, Hong Kong and Macau fell by more than 90 percent compared with December Even with more than NT$450 billion (US$14.85 billion) in financial aid from the Executive Yuan’s expanded relief package, local tourism-related businesses are unlikely to rebound from the COVID-19 pandemic any time soon, a central bank report released last month said. The NT$1.05 trillion relief package includes NT$472 billion in financial assistance for tourism and transportation sectors, such as airlines, hotels, travel agencies, taxis and tour buses. However, a March 20 central bank report said that the effects of the COVID-19 pandemic on global and domestic economies are far greater than that of the 2002-2003 SARS epidemic, despite any benefits from delayed purchases
Taiwan’s GDP growth would slow to 0.2 percent this year as the COVID-19 pandemic would hurt the economy more severely than the government’s expanded relief measures could cover, Moody’s Investors Service said yesterday. Moody’s said that the pandemic’s effect on the economy has escalated from a temporary supply-side disruption of cross-strait trade to a global economic downturn. “The outbreak has evolved into a serious demand shock to Taiwan’s economy externally and domestically as the health crisis has swept the globe,” it said in a report. Taiwan is highly exposed to a global downturn because of its reliance on trade and cyclical industries. Export