China's consumer prices decline 1.4pc
Thursday, 11 June 2009
BEIJING June 10 (Bloomberg): China's consumer prices fell for a fourth month, making it easier for the government to keep interest rates low and boost spending to revive the world's third-largest economy.
Prices dropped 1.4 per cent in May from a year earlier, after falling 1.5 per cent in April, the statistics bureau said today. The median estimate in a Bloomberg News survey of 16 economists was for a 1.3 per cent decline. Producer prices fell 7.2 per cent, the most on record.
Inflation may return as the economy recovers and commodity prices climb from last year's lows. The central bank triggered an explosion in credit this year by scrapping restrictions on growth in new loans and keeping the one-year lending rate at a four-year low of 5.31 per cent.
"China's economy is already rebounding and as soon as it regains momentum, prices will return to positive territory," said Sherman Chan, an economist with Moody's Economy.com in Sydney.
The Shanghai Composite Index of stocks rose 0.5 per cent as of the 11:30 a.m. local time break in trading. The yuan traded at 6.8330 against the dollar at 12:05 p.m., from 6.8333 before the data was released. Yuan forwards rose on speculation that currency gains will resume as the economy recovers.
Declines in prices in China span consumer goods, food and housing. Producer prices are constrained by industrial overcapacity, the statistics bureau said in a statement.
Prices dropped 1.4 per cent in May from a year earlier, after falling 1.5 per cent in April, the statistics bureau said today. The median estimate in a Bloomberg News survey of 16 economists was for a 1.3 per cent decline. Producer prices fell 7.2 per cent, the most on record.
Inflation may return as the economy recovers and commodity prices climb from last year's lows. The central bank triggered an explosion in credit this year by scrapping restrictions on growth in new loans and keeping the one-year lending rate at a four-year low of 5.31 per cent.
"China's economy is already rebounding and as soon as it regains momentum, prices will return to positive territory," said Sherman Chan, an economist with Moody's Economy.com in Sydney.
The Shanghai Composite Index of stocks rose 0.5 per cent as of the 11:30 a.m. local time break in trading. The yuan traded at 6.8330 against the dollar at 12:05 p.m., from 6.8333 before the data was released. Yuan forwards rose on speculation that currency gains will resume as the economy recovers.
Declines in prices in China span consumer goods, food and housing. Producer prices are constrained by industrial overcapacity, the statistics bureau said in a statement.