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China's annual inflation rate slows
2013年度通胀率回落 低于预期水平
China's annual inflation rate slowed more than expected last year, and is far below the government's upper limit of 3.5 percent.
China's inflation rate fell to a seven month low of 2.5 percent in December, from the previous month's 3 percent. The number is also below the market expectation of 2.7%, easing fears of tighter monetary policy. China's inflation was 2.6 percent for the year of 2013, well within the government's target limit of 3.5%.
However, inflation may quicken in coming months as the government pushes market-oriented reforms to liberalize energy and utility prices. Many predict that CPI growth this year will be much higher than last year.
Food prices rose 4.1 percent in December from a year earlier, slowing from November's 5.9 percent rise.
Month-on-month, consumer prices rose 0.3 percent versus 0.4 percent expected by economists.
"From the CPI trend in 2013 we can see that the lowest month was 2%, the highest was 3.2 percent. Not a very large difference. So the trend in 2013 was very stable," Liu Jiawei, analyst of NBRC, says.
Rising money market rates and bond yields indicate the central bank is tightening liquidity conditions to reduce debt levels and contain credit risks.
Analysts say, modest inflation pressure will allow policymakers to continue focusing on policies to support growth while implementing reforms.
"The new government is very clear with its prudent monetary policy stance. They will not increase liquidity massively, but there is little sign of a sharp turnaround in its policy," Niu Li, Head of Macro Econ. Research of China National Information Center, says.
Going forward, analysts expect January figures to exceed 3 percent due to the Chinese New Year.
The upcoming pricing reforms could cause an increase in commodity and public utility prices, which will push up CPI in the second half of 2014.
