China inflation rises again as price index hits 25-month high

11 November 2010 05:23  [Source: ICIS news]

GUANGZHOU (ICIS)--Inflation in China continued to rise in October, but growth in consumption and investments was decelerating, official data showed on Thursday.

On a year-on-year basis, China’s consumer price index (CPI) increased by 4.4% in October, while its producer price index (PPI) rose by 5%, data from the National Bureau of Statistics (NBS) showed. The October CPI was a 25-month high.

The Chinese central bank announced late on Wednesday that it would raise the bank reserve ratio by half a percentage point in its latest move to curb accelerating inflation.

In October, the country’s industrial output grew by 13.1% year on year, but the growth was down by 0.2 percentage points from September. Total retail sales increased by 18.6% year on year, but the growth was down by 0.2 percentage points compared with September, NBS data showed.

Fixed-asset investments jumped 24.4% year on year during the January-October period, 0.1 percentage points lower than in the first nine months of 2010, the NBS said.

China’s export growth slowed to 22.9% in October from 25.1% in September, according to customs data released on Wednesday.

Analysts said that the deceleration in investments and exports was the result of governmental controls that focus more on “growth quality” than “growth rate”.

“October’s CPI exceeded the market expectation of 4% and inflation would extend throughout this year,” said Qiu Ziyuan, chief analyst at Shenzhen-based broker China Merchants Securities (CMS). “The government may hike interest rates again later this year on inflation concerns.”

China raised interest rates by 0.25 percentage points on 19 October, its first hike since December 2007.

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By: Fanny Zhang
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