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China’s inflation accelerates as food-price gains quicken

CHINA’S inflation rebounded from a 33-month low as food costs rose the most since August, while deflation in factory-gate prices eased for a second month.

The consumer price index rose 2 percent in November from a year earlier, the National Bureau of Statistics said on its web site on Sunday. That compares with the 2.1-percent median estimate in a Bloomberg News survey of 35 economists and 1.7-percent gain in October. Producer prices fell for a ninth month, while the pace of the decline moderated.

The data may herald a new round of inflation should the nation’s nascent growth recovery gather pace, with industrial-production and retail-sales data due later on Sunday forecast to show a pickup in November. Faster price gains may give the new leadership under Communist Party chief Xi Jinping less scope to loosen policies to aid expansion.

“Inflation rose slightly less than the market expected, but nonetheless we believe it bottomed in October and will likely rise further in December and 2013, as growth picks up and adds inflationary pressure to the economy,” said Zhang Zhiwei, chief China economist at Nomura Holdings Inc. in Hong Kong.

The producer price index fell 2.2 percent from a year earlier after a 2.8-percent drop in October. That compares with the median estimate for a 2-percent decline in a Bloomberg survey of 30 economists. Deflation eased in costs for mining, raw materials and manufacturing, the statistics bureau said.

“Chinese authorities will continue to guard against the inflation risk in 2013,” Liu Li-Gang, chief Greater China economist at Australia & New Zealand Banking Group Ltd. in Hong Kong, said in a note on Sunday. Investment spending and high food prices will help inflation “re-emerge” in the second half of 2013, and the central bank will have to pay more attention to managing price expectations, Liu wrote.

China’s benchmark stock gauge, the Shanghai Composite Index, rose 4.1 percent last week, the most in a year, as the ruling Politburo signaled an increased focus on urban development.

Consumer-price gains have slowed from a three-year high of 6.5 percent in July last year and have stayed below the government’s 2012 target of 4 percent since February.

China’s Politburo, a committee of the ruling party’s top leaders headed by Xi, said last week the government should work to keep consumer prices stable and maintain continuity and stability in its macroeconomic policies.

The pace of food-price gains accelerated for the first time in three months, increasing 3 percent in November from a year earlier after a 1.8-percent rise in October, today’s report showed. The decline in pork prices moderated to 11.5 percent in November from a year earlier, after a 15.8-percent fall in October. They jumped 26.5 percent in November last year.

Non-food inflation cooled to 1.6 percent in November from a year earlier, while consumer-goods prices jumped 1.9 percent, the most since August.

Even with the gains, Lu Ting, head of Greater China economics at Bank of America Corp. in Hong Kong, said inflation is still “low.”

“Inflation of both consumer and factory-gate prices remained subdued, providing room for the government to sustain the current pro-growth policy stance,” Lu said in a note today.

(Bloomberg News)

In Photo: Women buy vegetables from a vendor at a market in Nanjing in east China’s Jiangsu province on Sunday. China’s main gauge of inflation rose 2.0 percent in November, up from the previous month’s 1.7 percent, driven largely by food price increases, the government said on Sunday.  (AP)










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