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People's Daily Online>>China Business

Inflation drop may see shift in policy

By Chen Jia and Wang Ying  (China Daily)

09:31, January 13, 2012

BEIJING - Inflation eased to a 15-month low in December, further fueling speculation that the government may ease monetary policy.

Consumer price inflation of 4.1 percent, from the same month last year, saw the continuation of an easing trend over the last five months.

The trend is expected to continue this year and may lead to the Consumer Price Index (CPI) averaging 3 percent as production and exports slow due to Europe's difficulties, economists said.

This was the weakest growth since October 2010, just under the 4.2 percent for November, the National Bureau of Statistics (NBS) said on Thursday.

"It gives more room for the government to change policies" toward a growth-oriented stance, said Li Daokui, a member of the monetary policy committee of the People's Bank of China.

"The prospect of flexibility is increasing."

According to the NBS, consumer prices surged by 5.4 percent in 2011, 1.4 percentage points higher than the government's yearly target. Inflation soared to a 37-month peak of 6.5 percent in July.

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