China’s consumer inflation rose modestly last month, official figures showed yesterday, although it remained below 2 percent in a sign that the economy is still struggling with the effects of years of Beijing’s “zero COVID-19” policy.
The consumer price index — the main gauge of inflation — hit 1.8 percent year-on-year, up from 1.6 percent in November last year, the Chinese National Bureau of Statistics (NBS) said.
Core inflation, which excludes volatile food and energy prices, picked up slightly to 0.7 percent after staying unchanged at 0.6 percent for three straight months, the bureau said.
Photo: AP
Consumer prices last month “were generally stable” thanks to multiple measures to ensure market supply and price stability, NBS senior statistician Dong Lijuan (董莉娟) said.
Inflation for the whole of last year rose by an average of 2 percent, making China an outlier compared with other major economies where prices have soared on the back of a spike in energy and food costs, as well as supply chain snarls.
Beijing had targeted an average inflation rate of 3 percent for last year, and the lower figure is to give authorities room to provide much-needed stimulus to the economy.
Photo: EPA-EFE
However, the world’s second-largest economy is still reeling from the effects of years of its “zero COVID-19” policy, which hammered businesses and supply chains, and dampened consumption, although many restrictions have now been lifted.
The producer price index, which measures the cost of goods leaving factories, last month contracted for the third consecutive month.
The 0.7 percent shrinkage is a further sign of weak demand and reduced margins for businesses.
“The economy is still running below potential,” Pinpoint Asset Management Ltd (保銀私募基金管理) chief economist Zhang Zhiwei (張智威) wrote in a note. “High-frequency indicators such as traffic flows picked up recently, but demand is still not strong enough to lead to inflationary pressure. Inflation is not a constraint for monetary policy to loosen further this year.”
China has been relatively unaffected by a global surge in food prices since Russia’s invasion of Ukraine in February last year, but officials are keeping a close eye on prices of pork, widely consumed in China, to avoid popular discontent.
While food prices in general rose a moderate 2.6 percent year-on-year last month, pork surged 22 percent.
As the reopening gains momentum, consumer and producer prices are likely to “warm up,” Guotai Junan International Holdings Co (國泰君安國際控股) chief economist Zhou Hao (周浩) said.
However, “overall inflation pressure remains mild,” he added.
Authorities on Thursday cited “volatile” international commodity prices this year as a concern.
“Imported inflation pressure remains,” Chinese National Development and Reform Commission Department of Price Director Wan Jingsong (萬勁松) told a news briefing.
However, he added that China is “confident and capable” of maintaining stable prices.
Additional reporting by Bloomberg
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