China’s inflation steady at 2.5 per cent in January; food price rise eases to 3.7 per cent

The Associated Press 0

BEIJING, China – China’s consumer inflation held steady in January, easing pressure on the government to control living costs as it launches ambitious economic reforms.

Consumer prices rose 2.5 per cent over a year earlier, data showed Friday. The rise in politically sensitive food costs decelerated to 3.7 per cent from December’s 4.1 per cent.

Lower inflation is one less distraction for communist leaders as they focus on carrying out ambitious promises of reforms aimed at making China’s economy more productive and keeping incomes rising.

Low inflation also leaves room for Beijing to stimulate the economy if necessary. Last year’s economic expansion tied 2012 for the slowest since 1999 at 7.7 per cent and growth looks set to decline further this year.

The stability in inflation was unusual because Chinese consumer prices normally spike ahead of the Lunar New Year holiday as families stock up on gifts and food for banquets.

Producer prices, measured as goods leave the factory, declined by 1.6 per cent from a year earlier. Producer price inflation has been negative for nearly two years, reflecting excess production capacity in many industries that has led to price-cutting wars.

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National Bureau of Statistics of China (in Chinese): www.stats.gov.cn

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