Food prices fuel Chinese inflation
China’s inflation accelerated more than forecast to a seven-month high as the nation’s coldest winter in 28 years pushed up vegetable prices, a pickup that may limit room for easing to support an economic recovery.
The consumer price index rose 2.5 per cent in December from a year earlier, the National Bureau of Statistics said today in Beijing. That compares with the 2.3 per cent median estimate in a Bloomberg News survey of 42 economists and a 2 per cent gain in November.
The decline in the producer-price index eased to 1.9 per cent.
The quickening in inflation makes further policy loosening less likely, after data yesterday on exports and credit growth underscored the strength of China’s economic rebound.
Chen Yulu, a central bank academic adviser, said Tuesday that price gains may become a concern in the second half.
‘‘Don’t expect any policy relaxation when prices are rising fast,’’ Li Miaoxian, a Beijing-based economist with Bocom International, the investment banking unit of Bank of Communications, said before today’s report.
Inflation may exceed 3 per cent next month because the weeklong Chinese New Year holiday falls in February this year after being in January in 2012, he said.
Food prices rose 4.2 per cent in December from a year earlier, the most since May, the data showed. Vegetable prices increased 14.8 per cent from a year earlier and contributed 57.5 per cent to the total 0.8 per cent month-on-month gain in the CPI, the bureau said.
Pressure on food costs may ease after the holiday, it said in a statement.Inflation pressure may be spreading to other parts of the economy. Prices of services rose 2.5 per cent in December from a year earlier, the fastest rate since October 2011.
The Shanghai Composite Index, China’s benchmark stock gauge, was little changed. The yuan strengthened against the US dollar to a 19-year high.
Consumer inflation has held below Premier Wen Jiabao’s 2012 target of about 4 per cent for 11 months, aiding the government’s efforts to engineer a growth recovery without triggering price gains. Producer prices dropped for the 10th month. For the full year, the CPI rose 2.6 per cent while factory-gate prices declined 1.7 per cent.
China’s vegetable prices may surge in some regions in the short term because of ‘‘abnormal weather,’’ the Ministry of Agriculture said last month.
The price of cabbage, a winter staple for Chinese households, jumped 9.3 per cent in the last week of December from a week earlier, according to Ministry of Commerce data from 36 Chinese cities.
Snow had left about 180,000 head of livestock dead in northern China by January 4, while icy weather in the subtropical Guangxi region damaged 8,310 hectares of crops, according to the official Xinhua News Agency.
McDonald’s raised some menu prices in China because of higher labor and input costs, the company said this week.
The People’s Bank of China has refrained from adjusting interest rates since cuts in June and July and it last reduced banks’ reserve requirements in May, preferring to control the amount of cash in the economy through bill sales and purchases.
Data yesterday showed signs of an improving economy, with exports up 14.1 per cent in December from a year earlier, the most since May, according to customs administration data. Imports grew 6 per cent after being unchanged in the previous month. Aggregate financing rose 28 per cent from a year earlier a year earlier, according to the central bank.G
The government will release fourth-quarter gross domestic product, December industrial production and retail sales and full-year fixed-asset investment next Friday.
Economic growth is tipped to have accelerated to 7.8 per cent in the quarter from a year earlier, up from a three-year low in the previous period, according to a Bloomberg News survey.