Will Inflation Sap China’s Growth?
Prices in China stayed high, but leveled off, while factory output rose, suggesting some success in efforts to tame inflation without harming growth.
China’s February inflation held steady at 4.9 percent, with central bank governor Zhou Xiaochuan optimistic about current trends
Zhou Xiaochuan says: “Currently, inflationary expectations are generally stable. That is to say, if we observe the CPI (consumer price index) figures for December, January and February, although they are high, inflationary expectations are currently relatively stable.”
Core inflation, stripped of volatile food costs, slowed.
Above-forecast factory output data, also released Friday, lends support to the view China could be past the halfway point of its monetary tightening campaign.
New loans extended by domestic banks also reportedly fell sharply in February.
Reigning in excessive lending has been a key focus for Beijing.
But with inflation still well above its average target of four percent, few believe China is close to the finish line, with the next dose of tightening perhaps just round the corner.
Bottom line: China’s February inflation levels off at 4.9 percent, while factory output rises; suggesting some success in taming price pressures and not hurting growth.