BEIJING: Chinese inflation levelled off in February while industrial output accelerated, tentative signs that the government is succeeding in taming price pressures without unduly harming growth in the world's second-largest economy, according to Reuters.
Beijing is not about to declare victory in its battle against inflation, which economists say will pick up a touch in coming months, but data published on Friday lends credence to the view that it is more than midway through a sustained campaign of monetary tightening launched nearly half a year ago.
China's consumer price inflation steadied at 4.9% in the year to February, the same as in January, the National Bureau of Statistics said. Although above forecasts for 4.7%, the reading contrasted with dire warnings a few months ago of runaway prices. Core inflation, stripped of volatile food costs, slowed.
"We are still facing high inflationary pressures in coming months," said Wang Hu, economist with Guotai Junan Securities in Beijing.
"The economy is performing quite well, which can be seen from the fixed asset investment and industrial output figures," he added. "I think China's economy may start to slow down in the second quarter, and the consumer price index will also start to trend down in June."
Industrial output in the first two months of 2011 rose 14.1% year-on-year from a 13.5% pace in December, vaulting past market expectations of a 13.3% increase.
Reflecting the surge in global commodity costs earlier this year, producer price inflation jumped in February to 7.2% from 6.6% a month earlier.
INFLATION A PRIORITY
China's top leaders have declared that their priority this year is to control inflation. So far, complaints about rising prices have amounted to little more than grumbles, but serious inflation has sparked social unrest in China in the past.
To meet the official goal of keeping inflation to a 4% average this year, the government has raised interest rates three times and banks' reserve requirements five times since October, while also using a series of direct controls to cap price rises.
The most important part of Beijing's efforts has been reining in banks, which unleashed a torrent of credit over the past two years, swamping the economy in cash.
Reports in official media have said that new loans in February were slightly more than 500 billion yuan (US$76 billion), a steep drop from January and considerably less than expected. If confirmed, that would suggest that China has finally gained traction in controlling the excesses of banks.
In a statement on Friday, the Chinese central bank said it would ensure that there is an "appropriate" amount of liquidity in the economy this year, guiding credit growth at a reasonable pace.
For all these signs of progress in taming inflation, it is notoriously difficult to interpret Chinese economic data at the start of the year. Many businesses shut their doors or run at half speed for weeks because of the Lunar New Year, which fell in early February this year.
A reminder of the distortions this causes came on Thursday, when data showed that China had recorded its largest trade deficit in seven years in February. That helped fuel a sell-off in global markets, but economists said the country was likely to return to a chunky surplus over the rest of the year. - Reuters
Beijing is not about to declare victory in its battle against inflation, which economists say will pick up a touch in coming months, but data published on Friday lends credence to the view that it is more than midway through a sustained campaign of monetary tightening launched nearly half a year ago.
China's consumer price inflation steadied at 4.9% in the year to February, the same as in January, the National Bureau of Statistics said. Although above forecasts for 4.7%, the reading contrasted with dire warnings a few months ago of runaway prices. Core inflation, stripped of volatile food costs, slowed.
"We are still facing high inflationary pressures in coming months," said Wang Hu, economist with Guotai Junan Securities in Beijing.
"The economy is performing quite well, which can be seen from the fixed asset investment and industrial output figures," he added. "I think China's economy may start to slow down in the second quarter, and the consumer price index will also start to trend down in June."
Industrial output in the first two months of 2011 rose 14.1% year-on-year from a 13.5% pace in December, vaulting past market expectations of a 13.3% increase.
Reflecting the surge in global commodity costs earlier this year, producer price inflation jumped in February to 7.2% from 6.6% a month earlier.
INFLATION A PRIORITY
China's top leaders have declared that their priority this year is to control inflation. So far, complaints about rising prices have amounted to little more than grumbles, but serious inflation has sparked social unrest in China in the past.
To meet the official goal of keeping inflation to a 4% average this year, the government has raised interest rates three times and banks' reserve requirements five times since October, while also using a series of direct controls to cap price rises.
The most important part of Beijing's efforts has been reining in banks, which unleashed a torrent of credit over the past two years, swamping the economy in cash.
Reports in official media have said that new loans in February were slightly more than 500 billion yuan (US$76 billion), a steep drop from January and considerably less than expected. If confirmed, that would suggest that China has finally gained traction in controlling the excesses of banks.
In a statement on Friday, the Chinese central bank said it would ensure that there is an "appropriate" amount of liquidity in the economy this year, guiding credit growth at a reasonable pace.
For all these signs of progress in taming inflation, it is notoriously difficult to interpret Chinese economic data at the start of the year. Many businesses shut their doors or run at half speed for weeks because of the Lunar New Year, which fell in early February this year.
A reminder of the distortions this causes came on Thursday, when data showed that China had recorded its largest trade deficit in seven years in February. That helped fuel a sell-off in global markets, but economists said the country was likely to return to a chunky surplus over the rest of the year. - Reuters
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