China Inflation Rises to 2.4 Percent

April 11, 2014 Share Print 0

China’s consumer inflation edged up in March as food prices rose despite signs the world’s second-largest economy is slowing.

Consumer prices rose 2.4 percent compared with a year earlier, up from February’s 2 percent rise, government data showed Friday. The increase was driven by a 4.1 percent rise in politically sensitive food costs.

Producer prices, measured as goods leave the factory, fell by 2.3 percent in a sign of weakening economic growth, the National Bureau of Statistics reported. It was their 25th straight month of decline.

Inflation still is well below the official target for the year of 3.5 percent, leaving Beijing room to stimulate the slowing economy with interest rate cuts or other measures if necessary.

China’s imports shrank 11.3 percent in March in a sign of weak domestic demand while manufacturing failed to pick up as it usually does following the end of the Lunar New Year holiday.

On Thursday, Premier Li Keqiang ruled out new economic stimulus in response to short-term economic fluctuations.

In a speech, Li appeared to try to prepare companies and the public for the possibility China might fall short of its 7.5 percent official economic growth target this year. He said growth might come in above or below the target.

Relatively low inflation could give Beijing room to carry out promised reforms to make prices of electric power, gas, water and other resources more market-oriented, said JP Morgan economist Haibin Zhu in a report. That is intended to make the economy more efficient and productive by removing hidden subsidies that encourage waste.

via Mainichi

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Alfonso Esparza

Senior Currency Analyst at Market Pulse

Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.