China’s consumer price index grew only 2.2% in June, the lowest rate since January 2010, while producer prices slide 2.1% to extend declines from June, The Wall Street Journal reported. The decline in CPI growth is attributed mainly to slowing inflation of food prices, which grew only 3.8% in June compared to 6.4% in May. The government cut to benchmark interest rates last week may have been a result of declining concerns over inflation. Slowing inflation will usher in further expansionary monetary and fiscal policies to rejuvenate the ailing Chinese economy, economists said. According to Zhiwei Zhang, a Nomura economist, consumer inflation will rise in the fourth quarter as the economy speeds up and food prices see gradual increases as summer winds down. Nevertheless, lower than expected consumer inflation in 2012 will afford more opportunity for energy-price reforms, Zhang said.
You must log in to post a comment.