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Consumer Inflation in China shoots up in Dec

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Consumer Inflation in China shoots up in Dec

Consumer Inflation in China shoots up in Dec

Key takeaways: 

  • China consumer inflation revs in Dec; PPI drops with weak demand.
  • China’s yearly consumer inflation rate revved in December, driven by increasing food costs even as domestic demand was delayed amid restrained economic activity.

China’s yearly consumer inflation rate revved in December, driven by increasing food costs even as domestic demand was delayed amid restrained economic activity.

Economists predict inflation will continue to boost in the first quarter of 2023.

China’s consumer price index rises: 

The consumer price index (CPI) in December was 1.8% higher than a year back, increasing faster than the 1.6% yearly growth seen in November, data from the National Bureau of Statistics (NBS) revealed on Thursday. The result reached a Reuters poll estimate of 1.8%.

China dumped its strict zero-COVID actions last month, lifting lockdowns, removing quarantine and ending regular testing. Consequently, economists anticipate inflation to continue to shoot up in the first quarter.

“There are several early signs that the shift toward living with COVID is beginning to put upward pressure on expenses,” said Zichun Huang, an economist at Capital Economics. “But the uptick in inflation is improbable to be as large as that witnessed in many other economies as they reopened.”

Analysts do not foresee rising inflation prompting a rise in interest rates.

“As inflation will stay manageable over the foreseeable future, we believe the People’s Bank of China will need to reduce the MLF (policy) rate by ten bps in Q1,” stated Zhou Hao, chief economist at Guotai Junan Group.

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