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China's CPI in surprise jump

Monday, April 09, 2012 - 01:17

April 9 - China's consumer prices post surprise rebound, but analysts say spike is temporary, with pork prices indicating intact downward inflation trend. Arnold Gay reports.

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A spike in food prices drove China's inflation to a higher-than-expected 3.6 percent last month, but analysts say the jump is a short-term rebound, driven partly by cold weather. China also raised retail gasoline and diesel prices in March by six to seven percent, contributing to higher energy and transportation costs. But analysts say these carry far less weight in China's consumer price index than pork prices, which fell every week last month. Pork is a major staple of Chinese diets, and a key component of the CPI's food sub-index. Overall pork prices have fallen 10 percent in the last two months. With producer prices also down 0.3 percent on the year, economists say China is on track to meet its four percent inflation target for 2012. This gives the central bank ample room to unwind some of its strident tightening between 2010 and last year. A Reuters poll shows economists think Beijing could cut banks' reserve requirement ratios (RRR) by another 150 basis points before December to encourage more lending to cash-strapped firms. Arnold Gay, Reuters.

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China's CPI in surprise jump

Monday, April 09, 2012 - 01:17