Monday, 14 May 2012

China inflation rate slows to 3.4% in April

Author / Source : Independent Online/afp

China's inflation slowed in April from the previous month, official data showed Friday, easing worries of resurgent prices and giving Beijing room to loosen monetary policy to boost slowing growth.

The country's consumer price index (CPI) rose by 3.4 percent year on year in April compared with 3.6 percent in March, the National Bureau of Statistics said, a slowdown analysts said was driven by falling food prices.

The April figure was exactly in line with market expectations, according to a poll of 15 economists by Dow Jones Newswires.

"Inflation is on a downward trend," Ren Xianfang, an economist at IHS Global Insight in Beijing, told AFP.

"As to food prices, which have a big impact on CPI, supply is quite sufficient right now. So overall, we can say that inflationary pressure this year is not big," he said.

The key food component of inflation rose 7.0 percent year on year in March -- contributing more than two percentage points to overall inflation -- but eased from a 7.5 percent rise in March, the bureau said.

China has targeted annual growth in inflation to within four percent this year as Beijing fears surging prices carry the potential to cause social unrest as citizens grumble about paying more.

The producer price index (PPI), which measures the cost of goods at the farm and factory gate and is an indicator of future consumer prices, slipped 0.7 percent in April from a year earlier, a sharper fall than the 0.3 percent in March.

Easing inflation should give China more room to ease monetary policy, including cuts in reserves for banks, to combat slower economic growth.

China's economy grew 8.1 percent in the first quarter of 2012, its slowest pace in nearly three years.

Beijing has already cut bank reserve requirements twice since December as policymakers aim to boost lending to spur growth. Analysts widely expect the government to further loosen monetary policy as it looks to boost growth.

Source: theindependentbd.com

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