October 15th, 2011
Econintersect: The National Bureau of Statistics has announced that the overall inflation rate in China fell to 6.1% in September (Consumer Price Index). This is 0.1% lower than August and 0.4% below July, which saw inflation reach a 37-month high. The Producer Price Index is contracting at an even greater rate, coming in at 6.5% after an August reading of 7.3%. All these numbers are annualized month-over-month rates of change. Follow up:
Follow up:The year-over-year change for CPI was 5.7% at the end of September, well above the government’s target of 4%. The Chinese Academy of Social Sciences, a major government think tank, projected this year's inflation may top 5.5 percent.
From the Shanghai Daily:
"Consumer price inflation appears to have peaked," said Alaistair Chan, an economist at Moody's Analytics. "Headline inflation is expected to trend lower for the near to medium term, although core inflation will remain an issue."
Qu Hongbin, chief economist at HSBC, said the easing inflationary pressure may trigger a minor adjustment in macroeconomic policies in the final quarter of the year.
"We expect tightening policies will become more flexible. But it does not mean a complete reverse of the current prudent policy stance. The central bank may allow more liquidity on the market to rescue cash-strapped small firms," Qu said.
To combat price rises, China has lifted interest rates three times so far this year, along with six reserve requirement ratio increases.
However, policymakers have become reluctant to launch more tightening measures since June after second-quarter economic data showed moderating growth.
Source: Shanghai Daily