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Business News/ News / World/  China factory-gate deflation deepens as consumer prices moderate
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China factory-gate deflation deepens as consumer prices moderate

The producer-price index dropped 2.7% in November from a year earlier

Consumer prices rose 1.4%, compared with the 1.6% increase in October.Premium
Consumer prices rose 1.4%, compared with the 1.6% increase in October.

Beijing: China’s factory-gate deflation deepened and consumer prices climbed at the slowest pace since 2009, signaling room for further monetary easing.

The producer-price index dropped 2.7% in November from a year earlier, the National Bureau of Statistics said in Beijing on Wednesday, compared with the median projection of a 2.4% decline in a survey of analysts by Bloomberg News. Consumer prices rose 1.4%, compared with the 1.6% increase in October.

Falling oil and metals prices have cut costs for China’s factories, leading to lower export prices and adding to disinflation pressure across the world. China’s central bank last month cut interest rates for the first time in two years as the economy heads for its weakest full-year growth since 1990.

“We are expecting further falls in the months ahead that will add to concerns about the threat of deflation," Julian Evans-Pritchard and Mark Williams, analysts at Capital Economics Ltd., wrote in a note ahead of the data.

China’s top leaders started a meeting on Tuesday to map out economic plans for 2015. Economics expect the government to lower next year’s economic growth target to 7% from about 7.5% this year as it adapts to the “new normal" of a slower expansion pace.

“In the near future, the PBOC will likely remain at the forefront of the global central banks’ battle against ’low- flation’," said Morgan Stanley analysts led by Helen Qiao in a note ahead of today’s release. The analysts said they expect more flexibility in combining interest rate and reserve requirement cuts with targeted easing measures to maintain macro stability and address structural imbalances. Bloomberg

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Published: 10 Dec 2014, 07:54 AM IST
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