High inflation numbers on food costs, weather, holiday
China’s inflation grew to a seven-month high in September amid a spike in food prices, poor weather and the Mid-Autumn Festival holiday.
It may limit the central bank to carry out further measures to support the economy even as exports declined last month.
The Consumer Price Index, the main gauge of inflation, expanded 3.1 percent from a year earlier in September.
It quickened from the rise of 2.6 percent in August, and exceeded the market expectation by a large margin.
Food prices, which account for nearly one third in the CPI basket, jumped 6.1 percent year-on-year last month, up from the gain of 4.7 percent in August. The CPI inflation is likely to remain above 3 percent in October and November. The growing inflationary pressure may not allow the central bank to change the tightening bias in the monetary policy for the remainder of the year.
In the first three quarters, China’s CPI inflation rose 2.5 percent year on year, well below the 3.5 percent limit set by the government.
The Producer Price Index, which tracks factory-gate inflation, dropped 1.3 percent on an annual basis last month, narrowing from the 1.6 percent decline in August, according to the statistics bureau.
China’s gross domestic product expanded 7.5 percent in the second quarter, the slowest in more than one year. The third-quarter growth rate, to be released on Friday, was expected to be around 7.7 percent.
Although China’s economy has exhibited signs of recovery with major business activity data beating expectation in the past few months, some analysts said the data may turn disappointing in September due to the limited effect of China’s mini stimulus.
China’s exports fell 0.3 percent from a year earlier in September, the first drop in three months and dragging down the trade growth of the world’s second-largest economy, data from the General Administration of Customs showed on Saturday.