China Watch Blog

Good news! China’s consumer price index (CPI), a main gauge of inflation, rose 0.6 percent year on year in November, the National Bureau of Statistics (NBS) announced Friday. It is the first monthly growth since January, before the CPI dropped 1.6% in February. The producer price index (PPI), a major measure of inflation at the wholesale level, fell 2.1% in November from a year earlier, according to the NBS. The rate of decline was 3.7 percentage points lower than that in October, which was down 5.8% year on year. The CPI fell 0.9 percentage point in the first 11 months, compared with a 6.3% rise in the corresponding period last year. Retail commodity prices in urban areas were up 0.4 percentage point and in rural areas they rose 0.9 percentage point year on year last month. Food prices, which account for about a third of the CPI, went up by 3.2% year on year in November, while non-food prices dropped 0.7 percentage point. The rise in commodity prices was mainly brought about by rising food prices and housing costs, including rents, construction expenses and property management fees. Housing costs rose 0.8 percentage point month on month in November this year, according to the NBS. Property prices are not included in the CPI. The rise in CPI is in line with analysts’ forecasts, Wang Tao, analyst with the UBS Securities, said. Inflation expectations were strong, due to this year’s credit boom and a rapid growth in property prices. However, China is not facing an inflation problem,” she told Xinhua, predicting that the CPI growth for next year would be around 3%. The government would keep food prices rising next year so as to encourage farm production, but prices of manufactured products would remain low as a result of the weak external demand, Wang said. So, things look positive next year.