Chinese Inflation Accelerates

China’s consumer price inflation accelerated notably in November driven by the rebound in food prices, while factory gate inflation slowed, official data showed on Thursday.

Consumer price inflation rose to 2.3 percent in November from 1.5 percent in October, the National Bureau of Statistics reported. However, this was slower than the economists’ forecast of 2.5 percent. Food prices advanced 1.6 percent, reversing last month’s 2.4 percent decrease. Fresh vegetable prices surged 30.6 percent. At the same time, non-food prices were up 2.5 percent.

Nonetheless, core inflation that excludes food and energy prices eased to 1.2 percent from 1.3 percent in the previous month.

The headline rate will drop back below 2 percent before long, with vegetable prices already reversing some of their gains, Julian Evans-Pritchard, an economist at Capital Economics, said.

Inflation concerns are not likely to hold back the People’s Bank of China from further loosening measures including policy rate cuts, the economist added.

Another report from the NBS showed that producer prices grew 12.9 percent annually after climbing 13.5 percent in October. Economists had forecast prices to 12.6 percent.

Factory gate inflation will continue to drop back over the coming months, Capital Economics’ economist noted. Admittedly, the omicron variant could lead to further disruptions to supply chains. But its main impact so far has been to push down oil prices.

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