BIZCHINA / Weekly Roundup
China's CPI inflation up to 1.9%
(chinadaily.com.cn)
Updated: 2006-02-27 15:07
China's consumer price index (CPI) rose 1.9 percent year-on-year in
January, the National Bureau of Statistics (NBS) said Wednesday. The
announcement draws wide concerns during the week of Feburary 20-26.
Official data
The CPI in urban areas went up two percent while that of rural areas up
1.7 percent
The prices of water, electricity and fuel, which went up by 8.4 percent
in January, increased the most. The prices of foodstuff rose by 3.6
percent in January, non-food prices went up one percent and consumer
product prices went up 1.7 percent, according to NBS figures.
Foodstuff, furnishing materials, maintenance services, education,
cultural goods, and recreation prices increased, while clothing,
transportation and telecommunication prices went down.
Analysis & Comments
NBS: The CIP figure this January rose partly because Jan. 29 is the
Spring Festival, a time of shopping sprees.
Reuters: China's annual consumer inflation quickened to 1.9 percent in
January because of stronger Lunar New Year spending, but economists said
price pressures remain muted and are unlikely to give policy-makers a
headache.
Qu Hong Bin, economist at HSBC
The numbers (CPI) are a little bit high, but bare in mind that you have
this distortion from the Chinese New Year and we would have to view these
numbers with caution. This cannot be seen as indicating a re-acceleration
in inflation.
Dong Tao, chief regional economist at Credit Suisse
My thought is that, as far as CPI is concerned, inflationary pressure is
well contained and I do not see much of a deflationary pressure in the
overall economy.
Paul Cavey, economist at Macquarie
(About CPI) Our understanding is that this was driven by food prices
rising quite sharply and non-food prices coming off, where our
expectation for the rest of the year is for food price inflation to
weaken and non-food prices to accelerate moderately.
Paul Cavey with Macquarie Securities in Hong Kong
It was treacherous to read too much into the figures because of the Lunar
New Year effect. But non-food prices bore watching.
Future price trend
Central bank: uncertainty exists over China's future price trend
China's consumer price index (CPI) is expected to grow around three
percent this year, the central bank said, citing figures from the Central
Economic Work Meeting that was held at the end of last year.
The probable investment rebound will lead to rising prices of raw
materials, fuel and power, which will be further exacerbated by the
ongoing reform of China's resource-pricing systems concerning fuel,
water, power, natural gas and coal, said the bank in a report on monetary
policy.
The prices of durable consumer goods as well as steel, iron, aluminium
and cement products, however, will probably fall due to oversupply,
dragging down the producer price index (PPI) and CPI in the country.
A survey by the central bank in the fourth quarter of 2005 shows that
41.7 percent of the urban residents predicted price rises, up 5.5
percentage points from the previous quarter, and 4.3 percent of the urban
residents predicted price drops, down 1.7 percentage points from the
previous quarter.
China Academy of Science: China is not expected to suffer from excessive
inflation or deflation in 2006, with consumer prices likely to rise to
about 1.97 percent.
Inflation is expected to pick up in the second half of the year but will
still be manageable, limiting the increase in consumer prices to 1.97
percent for all of 2006.
The think-tank also forecast that China's economy would expand around
eight percent a year between 2006-2010. The economy expanded 9.9 percent
in 2005.
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