Food and housing prices push up inflation
Beijing (AsiaNews/Agencies) – China’s inflation rose 4.9 per cent last month from a year earlier after a 4.6 per cent gain in December, exceeding the government’s 2011 target for a fourth month in a row. Food prices rose at a faster rate however. Producer-price inflation also quickened to 6.6 per cent from 5.9 per cent. The cost of borrowing is likely to go up as well.
Overall food prices climbed 10.3 per cent last month from a year earlier, after gaining 9.6 per cent in December. Increases varied according to item, probably because of drought and speculation. For example, whilst vegetable prices jumped 2 per cent, fruit prices surged 35 per cent and grain rose 15 per cent. Non-food prices rose instead 2.6 per cent from a year earlier. Housing costs jumped 6.8 per cent in January from a year earlier, the most since August 2008.
The National Bureau of Statistics (NBS) also revised the calculation of the components of the producer-price index, adding about 2,000 products to the basket and adjusting the weightings.
Under the revised weightings, the food component declined by 2.21 percentage points. Clothing, medical costs and telecommunications were also reduced, the NBS said today. Housing-related charges, which include rent and utility costs, were increased by 4.22 percentage points.
“All these numbers indicate that inflationary pressures haven’t abated and China has already entered into an era of structural inflation,” said Liu Li-gang, a Hong Kong-based economist. “This indicates more monetary policy tightening ahead.”
The acceleration reflects higher rents, a 53 per cent surge in money supply in the past two years and increasing domestic demand. In fact, banks handed out more than 1.2 trillion yuan of new credit in January compared with 481 billion in December.
This is why many expect the People’s Bank of China to raise its benchmark one-year lending (which it has already done three times since mid-October), and put more restrictions on bank loans.
Others believe the yuan’s low exchange rate also contributes to inflation by pushing up imported goods.
In the meantime, China has become the world’s No. 2 economy last year after Japan ’s gross domestic product fell an annualised 1.1 per cent in the fourth quarter, the Japanese government said yesterday. Japan's nominal GDP last year came to US$ 5.4742 trillion, less than China's total of US$ 5.8786 trillion, the Cabinet Office said yesterday
According to the International Monetary Fund, the Chinese economy will grow 9.6 per cent this year, six times faster than Japan . However, China’s average income stands at 20 per cent of that of Japan.