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BIZCHINA> Top Biz News
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Govt concerned about inflation expectations: official
(Xinhua)
Updated: 2009-10-22 17:23 Although China has no inflation problem, the government is still highly concerned about inflation expectations, Li Xiaochao, spokesman of the National Bureau of Statistics, said Thursday. China's consumer price index (CPI), a main gauge of inflation, dipped 1.1 percent year-on-year in the first nine months, according to NBS statistics released Thursday. The September CPI was up 0.4 percent over the previous month. However, the NBS did not provide the reading of September CPI on an annual basis. The CPI declined 1.2 percent in August from a year earlier, the seventh consecutive month of decline since it dropped 1.6 percent in February, the first fall since October 2002. The producer price index (PPI), a major measure of inflation at the wholesale level, dropped 6.5 percent year-on-year in the first three quarters of this year, the NBS said.
A key point of China's macro-regulation for the rest of the year would be to balance the tasks of ensuring a stable and relatively fast economic growth, adjusting economic structure and managing inflation expectations, according to a statement released after a State Council executive meeting, which was chaired by Premier Wen Jiabao, Wednesday. This was the first time that China's policy-makers made controlling inflationary expectations one of their priority tasks, analysts said. Inflation expectations in China were increasing, considering the movements of both CPI and PPI and the huge amount of bank lending, said Yang Ruilong, dean of School of Economics at Renmin University of China. The increase in money supply was 20 percentage points higher than China's economic growth, Yang said. "Usually soaring money supply will lead to price increases and cause inflation." The government set an annual target of 4 percent for the CPI increase in 2009 at the beginning of this year. The broad measure of money supply, M2, which covers cash in circulation and all deposits, was up 29.31 percent from a year earlier to 58.54 trillion yuan ($8.57 trillion) at the end of September. However, Chinese officials reiterated the government would continue the proactive fiscal policy and moderately easy monetary policy. "China's economy is at a crucial stage of stabilization and accelerating growth, a shift in monetary policy stance is unlikely in short term," said Lian Ping, chief economist at the Bank of Communications. China's CPI in urban areas dropped 1.3 percent and in rural areas 0.7 percent in the January-September period compared with the same period last year. (For more biz stories, please visit Industries)
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