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People's Daily Online>>China Business

China’s CPI growth to slow down markedly in 2012

(People's Daily Overseas Edition)

16:46, January 16, 2012

Edited and translated by People's Daily Online

China’s Consumer Price Index (CPI), a main gauge of inflation, rose 4.1 percent in December 2011 from the previous year, hitting a 15-month low, the National Bureau of Statistics said on Jan. 12.

The country’s inflation rate has remained persistently high for a long time, and reached 6.5 percent last July. The CPI downward trend in late 2011 came as a great relief, but the annual inflation rate still reached a high level at 5.4 percent last year, exceeding the Chinese government’s control target of 4 percent.

Inflationary pressure comes from growing food prices

Lian Ping, chief economist at the Bank of Communications, said that the main reason behind the slowdown in CPI growth in December is the disappearance of carryover effects, and the CPI grew 4.1 percent that month due to new inflationary factors.

Meanwhile, food prices rose 1.2 percent from November due to holidays and festivals, while the prices of other consumer goods continued downward trend. Overall, the slowdown in CPI growth will continue in 2012.

Inflationary pressure in December mainly came from food prices, which increased 9.1 percent from the previous year, driving the inflation rate up about 2.8 percentage points.

Liu Shangxi, deputy director of the Institute of Financial Science under the Ministry of Finance, said that the main causes of China’s growing consumer prices are its economic problems and flawed supply structure, rather than currency problems or excess demand.

The country should carry out targeted structural operations on its monetary and credit policy this year, instead of simply adjusting the total money supply.

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