Cold Winter in China pushes Inflation higher

China’s inflation accelerated more than forecast to a seven-month high as the nation’s coldest winter in 28 years pushed up vegetable prices, a pickup that may limit room for easing to support an economic recovery.

The consumer price index rose 2.5 percent in December from a year earlier, the National Bureau of Statistics said today in Beijing. That compares with the 2.3 percent median estimate in a Bloomberg News survey of 42 economists and a 2 percent gain in November. The decline in the producer-price index eased to 1.9 percent.

The quickening in inflation makes further policy loosening less likely, after data yesterday on exports and credit growth underscored the strength of China’s economic rebound. Chen Yulu, a central bank academic adviser, said Jan. 8 that price gains may become a concern in the second half.

“Don’t expect any policy relaxation when prices are rising fast,” Li Miaoxian, a Beijing-based economist with Bocom International Holdings Co., the investment banking unit of Bank of Communications Co., said before today’s report. Inflation may exceed 3 percent next month because the weeklong Chinese New Year holiday falls in February this year after being in January in 2012, he said.

Bloomberg

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