China: Inflation Eased To 6.1% in September14 October, 2011, 12:41. Posted by Zarathustra
Tags: Economy, Inflation
Inflation in China continues to moderate (on an year-on-year basis only, so it seems), and still way above the 4% target. The latest data from the National Bureau of Statistics shows that the headline consumer price index (CPI) inflation eased to 6.1% yoy in September from 6.2% yoy in August, in-line with expectation. On a month-on-month basis, the headline number rose 0.5% vs. 0.3% in August, which is probably not a welcomed thing.
Food prices is still leading the gain, with prices increased by 13.4% yoy, unchanged from August, while non-food prices rose by 2.9% yoy vs. 3.0% in August. Meat products are still the biggest gainer within the food category, which rose by 28.4% vs. 29.3% in August, coming down slightly. On a month-on-month basis, good prices rose by 1.1% vs. 0.6% in August, while non-food prices increased by 0.2%, unchanged from August.
On another note, the producer price index rose by 6.5% in September vs. 7.3% in August, lower than the expectation of 6.9%.
Source: National Bureau of Statistics
The year-on-year headline figures have been coming off the high, but the month-on-month trend certainly does not look like inflation is solved. However food prices are going to come off the high quite significantly, that’s according to the Bloomberg Brief’sMichael McDonough:
Given the high weight of the food basket within the CPI, we might probably see a more meaningful fall of the headline figure next month, but probably still way above 5%. Even with inflation coming off, however, the full-year overall target of 4.0% has almost no hope of achieving. For now, the probability of further tightening looks extremely low given the global macro picture as well as the local government debts and shadow banking crisis concerns, though it is hard to argue for outright easing as well as inflation will still be above target for quite a while. I do not expect any real tightening or easing for the moment.
On the whole, this is not a bad news as far as inflation is concerned. Probably not good enough, but certainly not bad.