Consumer price growth in China moderated slightly in January, the consumer price index (CPI) rising 1.5% year-on-year compared to 1.9% in December, the Wall Street Journal reported. It is the third consecutive month in which the index has risen. Fears abound that China’s rapid credit growth over the past year will drive up inflation and this is being felt most forcibly on the supply side, with the producer price index (PPI) rising 4.3% year-on-year in January. The December PPI was 1.7%, the first increase after 12 months of declines. Rising producer prices were widely expected after the price component of China’s purchasing managers’ index rose to 68.5 in January from 66.7 in December. Bank lending came to US$203.5 billion in January, well beyond the US$55.6 billion in new loans extended in December, although the pace of lending did slow sharply towards the end of the month. China’s broad money supply, or M2, rose 25.98% year-on-year in January, down from 27.68% in December.
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