China Inflation

China

China: Inflation edges down in September

October 14, 2011

In September, consumer prices rose 6.1% over the same month last year, which undershot the 6.2% increase in August as well as market expectations. The September outturn represented the lowest level since May and suggests that inflation has left the July peak of 6.5% behind. The main drivers behind the September drop were lower prices for housing and education. Food prices continued to grow at the 13.4% rate observed in August. Overall inflation excluding food inched down from 3.0% in August to 2.9% in September. Owing to the high inflation levels registered in recent months and despite the moderation observed in September, annual average inflation rose from 5.2% in August to 5.4% in September, which represented its highest level since December 2008. Meanwhile, producer price inflation fell from 7.3% in August to 6.5% in September, which undershot market expectations of a 6.8% rise. Despite the moderation in September, annual average producer price inflation rose to 6.7%, up from 6.5% in August. According to some analysts, the moderation in inflation, together with weakening external demand for Chinese exports, are likely to prompt monetary authorities into less restrictive policy in the coming months. The government set an inflation target of 4.0% for this year.


Author: Ricard Torné, Head of Economic Research

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