China Inflation Eases In September

China Inflation Eases In September


Inflation in China slowed in September led by a notable fall in food inflation, the latest figures from the National Bureau of Statistics revealed Monday. This gives ample room for policymakers to ease policy if the economy shows further weakness, reflecting tepid domestic as well as external demand.
Inflation eased to 1.9 percent in September from 2 percent in August. The outcome was in line with economists' forecast but a tad above July's 30-month low of 1.8 percent.
Food inflation eased to 2.5 percent from 3.4 percent in the previous month. At the same time, non-food prices gained 1.7 percent compared to 1.4 percent rise in August.
Month-on-month, the consumer price index rose 0.3 percent, slower than the 0.6 percent increase in August which was the fastest increase since the start of the year.
The People's Bank of China has been moving cautiously in loosening its monetary policy after cutting interest rates twice this year to support the flagging economy.
Despite the recent slump in inflation to near two-year low, the bank remains concerned about the upward pressure on inflation from factors including a third round of quantitative easing by the U.S. Federal Reserve and rising domestic house prices.
Speaking at the IMF-World Bank annual meeting in Tokyo on Sunday, PBoC Deputy Governor Yi Gang said the bank would focus on managing inflation, while facing the dual challenge of balancing both internal and external risks.
PBoC Governor Zhou Xiaochuan, meanwhile, urged the central banks to consider draining excessive liquidity injected into the market and contain inflationary pressure in the long-term.
China's long-term inflationary pressure could be alleviated, as the country's yuan funds outstanding from foreign exchange are likely to grow more slowly in future, Xinhua reported Saturday citing Zhou's remarks in a magazine published by the PBoC.
According to data released over the weekend, the country's foreign exchange reserves rose to $3.29 trillion at the end of September from $3.24 trillion at the end of June. However, the rate of growth has slowed sharply since December 2011 due to slowing economic growth and the government's measures aimed at achieving more balanced growth in foreign trade.
Meanwhile, the statistical office reported Monday that China's producer prices continued to fall for a seventh month in September. The producer price index fell 3.6 percent year-on-year in September, following a 3.5 percent drop in the preceding month. Economists had forecast a 3.5 percent fall.
Official data on Saturday showed that China's exports rose 9.9 percent year-on-year in September, stronger than the 2.7 percent increase posted in August.
Import grew 2.4 percent from a year earlier, following a year-on-year drop of 2.6 percent in August. The trade surplus rose slightly to $27.67 billion from $26.66 billion in August.
The economy grew 7.6 percent in the second quarter, the weakest pace since the first quarter of 2009. Economists forecast growth in GDP to ease to 7.4 percent in the third quarter, below the government's full-year target of 7.5 percent. NBS is due to publish third quarter GDP data on October 18.