China Inflation Rebounds to 4.5% in January

Posted February 9th, 2012 at 1:45 am (UTC-5)
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China’s inflation rate unexpectedly accelerated in January, as consumer spending increased during the Lunar New Year holiday.

The National Bureau of Statistics said Thursday that consumer prices rose by 4.5 percent from a year earlier. That was well ahead of market expectations of 4 percent.

Before January, inflation had eased for five straight months after reaching a three-year high of 6.5 percent in July. Many analysts expect that downward trend to resume in February, saying the figures were driven by seasonal factors.

January’s inflation figures were heavily impacted by higher food prices, which typically rise in China during the Lunar New Year as consumer spending increases.

Qi Jingmei, an economic researcher at China’s State Information Center, said the holiday’s early arrival meant it had a bigger impact than usual.

“As the New Year and the Chinese New Year both came in January this year, the consumption enthusiasm pulled the price up.”

Food prices soared 10.5 percent in January, compared with 9.1 percent in December.

Some analysts say the rebound in inflation may temporarily limit the room for monetary policy easing by Chinese authorities. China has gradually eased controls to boost growth in the slowing economy, but is fearful of igniting higher inflation.