China’s consumer inflation unexpectedly eased last month, while producer price deflation deepened, heightening pressure on Beijing to roll out more stimulus measures quickly to revive flagging demand and shaky economic activity.
Chinese Minister of Finance Lan Foan (藍佛安) told a news conference on Saturday there would be more “counter-cyclical measures” this year, but officials did not provide details on the size or timing of the fiscal stimulus being prepared, which investors hope would ease deflationary pressures in the world’s second-largest economy.
The consumer price index (CPI) rose 0.4 percent from a year earlier last month, the slowest in three months, compared with a 0.6 percent rise in August, data from the National Bureau of Statistics (NBS) showed yesterday, missing a 0.6 percent increase forecast in a Reuters poll of economists.
Photo:AFP
The producer price index (PPI) fell at the fastest pace in six months, down 2.8 percent year-on-year, versus a 1.8 percent decline the previous month and below an expected 2.5 percent decline.
Chinese authorities have stepped up stimulus efforts in recent weeks to spur demand and help meet an about 5 percent economic growth target for this year, although some analysts say the moves might only offer temporary relief and stronger measures are needed soon or the weakness could extend well into next year.
Analysts and investors are now hoping that a meeting of China’s parliament in the coming weeks would unveil more specific proposals.
“The size of the fiscal stimulus matters. Decisive action is required before deflationary expectations become further entrenched,” Pinpoint Asset Management Ltd (保銀私募基金管理) chief economist Zhang Zhiwei (張智威) said.
Many China watchers say Beijing also needs to firmly address more deeply-rooted structural issues such as industrial overcapacity and sluggish consumption.
Excessive domestic investment and weak demand have pushed down prices and forced companies to reduce wages or fire workers to cut costs, further dampening consumer confidence.
Core inflation, which excludes volatile food and fuel prices, stood at 0.1 percent last month, down from 0.3 percent in August, also hinting that deflation pressures were mounting.
The core reading has been in the low range of below one percent for 20 consecutive months, reflecting a lack of momentum in prices and the need to stimulate consumption, Jones Lang Lasalle Inc chief economist and head of research for Greater China Bruce Pang (龐溟) said.
CPI was unchanged month-on-month, versus a 0.4 percent gain in August and below an estimated 0.4 percent increase.
Food prices perked up 3.3 percent year-on-year compared with a 2.8 percent rise in August, while non-food prices were down 0.2 percent, reversing a 0.2 percent uptick in August.
Among non-food items, the decline in energy prices deepened, and tourism prices switched to down from up with declines in airfares and hotel accommodation widening, the NBS said in an accompanying statement.
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