- POSTED: 09 Jan 2014 10:35
- UPDATED: 09 Jan 2014 16:55
This graph is an experimental feature that tracks number of views over time.
China's inflation rate was 2.6 per cent in 2013, official data showed Thursday -- well below the 3.5 per cent target set by the government in the world's second-biggest economy.
BEIJING: China's inflation rate was 2.6 per cent in 2013, official data showed on Thursday -- well below the 3.5 per cent target set by the government in the world's second-biggest economy.
The figure for the consumer price index (CPI), a main gauge of inflation, released by the National Bureau of Statistics (NBS) was unchanged from 2012.
Analysts broadly welcomed the statistics, saying they pointed to a stable outlook for prices and a reduced chance of monetary tightening.
Inflation has slowed markedly since 2011, when annual CPI spiked to 5.4 per cent.
The second year in a row of benign inflation data came as China's economy showed some signs of strength in the second half of last year, after a growth slowdown during the first six months.
For the month of December, inflation came in at 2.5 per cent compared with the same month the year before, slowing from the 3.0 per cent year-on-year figure registered in November.
The December result was the same as the median increase of 2.5 per cent predicted in a survey of 13 economists by Dow Jones Newswires.
Bank of America Merrill Lynch economists Lu Ting and Zhi Xiaojia said the CPI figure bodes well for managing liquidity conditions in China, which were volatile last year.
"Subdued inflation would be supportive of a neutral monetary (policy) rather than tightening," they said in a research note.
They emphasised that over the past two months markets have shown concern over whether the central bank, the People's Bank of China, would tighten credit supply if CPI rises approached the government's 3.5 per cent target.
"We thus believe a well-below 3.0 per cent CPI inflation could be good news for the markets as monetary tightening is not justified," they said.
China's producer price index (PPI), which measures prices for goods at the factory gate, declined 1.9 per cent in 2013, according to the NBS.
PPI also fell 1.4 per cent year-on-year in December, continuing a long string of decreases.
China's economy probably grew 7.6 per cent in 2013, according to a government report cited by state media last month, slightly above the country's official target and just below the figure of 7.7 per cent in 2012, the worst performance in 13 years.
Official figures last week showed that China's manufacturing growth slowed in December for the first time in six months, suggesting the economy faced headwinds at the end of last year.
Yao Jian, spokesman at the commerce ministry, said Thursday that China's total trade in goods last year was expected to reach $4.14 trillion.
That would mark about a seven percent increase from 2012, less than the government's target of eight percent.
China's General Administration of Customs is scheduled to announce 2013 trade figures on Friday.
ANZ bank economists Liu Li-Gang and Zhou Hao said that they expect Chinese economic growth will slow to 7.2 per cent in 2014.
"Therefore, China's inflationary pressures will remain manageable," they wrote in an analysis of the CPI data.
"We believe the Chinese authorities will maintain the inflation control target at 3.5 per cent," they added.
China was hit last month by a liquidity squeeze that sent interest rates soaring in a development widely seen as engineered by officials aiming to increase financial discipline over the country's banks. The financial system experienced a similar cash crunch in June.
Authorities are also working to contain opaque non-bank forms of lending, known as shadow banking.
"Inflation is not a major concern at this stage, but the crackdown on shadow banking will likely intensify and financial institutions may need to deleverage further," Nomura International economists wrote in a report.
They added that with China's leaders content with the current pace of economic expansion, "there is no strong incentive to loosen policy to stimulate growth" for now.