China July inflation at 3.3%, industry growth lowest in 11 months

11 August 2010 08:55  [Source: ICIS news]

GUANGZHOU (ICIS)--Consumer prices in China posted their highest increase so far this year at 3.3% in July and would remain high for the rest of the year, while the country’s economic expansion slows, analysts said on Wednesday.

Consumer inflation was at a 21-month high last month, while wholesale prices, as measured by production price index (PPI) jumped an annual 4.8%, based on data from the National Bureau of Statistics (NBS).

"The inflation expansion was largely due to fast spikes of food prices, driven by rising crop prices amid widespread flood that had heavily slashed production,” said Qiu Ziyuan, analyst with Shanghai-based broker China Merchants Securities (CMS).

In July, purchase price of raw chemical materials increased 6.7% year on year while fuel prices jumped 12%, based on NBS data.

Inflation would likely remain at an elevated level for the rest of 2010, partly due to continued rise in international crop prices, analysts said.

Meanwhile, growth in China’s industrial output slowed to 13.4% in July, the lowest recorded in 11 months, in line with the government’s initiative to restructure the economy and prevent overheating, analysts said.

China had, in the past few months, clamped down on property market speculation and on energy-intensive industries.

For the January-to-July period, fixed asset investment in China grew at a slower rate of 24.9% from 25.5% registered in the January-June 2010, based on NBS data.

“The drop in fixed asset investment was mainly due to deceleration of the property market amid governmental curbs on housing prices,” Qiu said.

Despite the slowing down of industrial activities, China’s economy remained healthy, analysts said.

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By: Fanny Zhang
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