Bloomberg News

China Consumer Prices Rise 6.1%, Matching Analyst Forecasts

October 13, 2011

(Updates with economist’s comment in fourth paragraph)

Oct. 14 (Bloomberg) -- China’s inflation exceeded 6 percent for a fourth month as officials across Asia struggle to cool prices even as growth slows.

Consumer prices increased 6.1 percent in September from a year earlier, the National Bureau of Statistics said today. That matched the median forecast in a Bloomberg News survey of 22 economists and followed a 6.2 percent gain in August. Producer prices rose 6.5 percent.

Elevated inflation is limiting Premier Wen Jiabao’s room for easing monetary policy as Europe’s debt crisis cuts demand for exports and small businesses in China report a credit squeeze. Growth in the world’s second-biggest economy is already slipping, with analysts forecasting that data next week will show a 9.3 percent expansion in the third quarter, down from 9.5 percent in the previous three months.

“Sticky inflation means that the government’s tightening stance may stay put for the time being,” Li Wei, a Shanghai- based economist at Standard Chartered Bank, said before today’s release. “If price gains slow to around 4 percent by the end of this year, that may offer some scope to ease policies if needed.”

India is also due to report inflation numbers today, with economists’ median forecast indicating a 9.75 percent increase in prices.

Weaker Exports

China’s statistics bureau will release gross domestic product data on Oct. 18. Yesterday’s trade numbers showed growth in overseas sales weakened in September, underscoring the threat that Europe’s crisis poses to the world’s biggest exporting nation.

In Beijing, officials are also monitoring a slowdown in the housing market after increases in interest rates and bank reserve requirements and a campaign to rein in speculation. Home prices fell month-on-month for the first time in a year in September, according Soufun Holdings Ltd., China’s biggest real- estate website owner.

The State Council this week unveiled tax breaks to support small businesses after some manufacturers collapsed in the city of Wenzhou in Zhejiang province.

Inflation reached a three-year high of 6.5 percent in July and may moderate in coming months partly because of so-called base effects. The government’s full-year target is 4 percent.

The increase in producer prices in September compared with the 6.9 percent median estimate in a Bloomberg survey of economists and a 7.3 percent gain in August.

Yum! Brands Inc. owner of the Taco Bell and KFC restaurant chains, said last week it expects food inflation in the “mid- teens” in China this quarter and plans to increase prices gradually to offset labor and commodity costs. Yum raised prices by 2 percent in September.

--Li Yanping, with assistance from Ailing Tan in Singapore. Editors: Nerys Avery, Paul Panckhurst

To contact Bloomberg News staff for this story: Li Yanping in Beijing at yli16@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net


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