China inflation cools amid signs growth is stabilizing

China's FIRST McDonald's (Photo credit: flickr.Marcus)

Beijing, Oct. 15, swing trading .- China's inflation was close to the slowest pace in two years in September, giving the government room to ease policies should the economy deteriorate further after import data pointed to weakness in domestic demand. Consumer prices rose 1.9% from a year earlier while the producer-price index dropped 3.6%, the National Bureau of Statistics said on its website today. China’s imports increased 2.4% from a year earlier while overseas shipments climbed 9.9%, the customs administration said on Oct. 13. A report this week may show the nation’s expansion slid to 7.4% in the third quarter from a year earlier, the seventh straight deceleration, underscoring International Monetary Fund warnings that weakening growth in developed economies is spreading to emerging markets. At the same time, there are signs China’s economy is stabilizing after exports exceeded estimates in September and money supply grew at the fastest pace in 15 months.

“Muted inflation pressure will provide more room for the government to introduce additional policy easing or stimulus measures,” said Lu Ting, chief China economist at Bank of America Corp. in Hong Kong. “The top task for the central bank now is to prevent growth from slowing further while stemming the rebound in home prices, which is the major constraint for easing in 2012.”

Asian stocks swung between gains and losses as concern the global economic slowdown is deepening was countered by China’s easing inflation and better-than-expected export data. The regional benchmark MSCI Asia Pacific Index slid 0.1% at 12:55 p.m. in Tokyo, having earlier risen 0.1%.

Stimulus Response

In China, the Shanghai Composite Index fell 0.5% at the 11:30 a.m. local-time break. The yuan was little changed at 6.2676 per dollar, close to a 19-year high.

China has refrained from implementing stimulus on the scale of the 4 trillion yuan ($586 billion at the time) package it unleashed at the end of 2008 during the global financial crisis, confining its response to measures such as two cuts in interest rates, reductions in bank reserve requirements, tax decreases, higher spending on social welfare and accelerated investment approvals. ... Continue to read.

Related articles

• China Inflation Cools Amid Signs Growth Is Stabilizing: Economy (bloomberg.com)
• Markets Live: Monday, 15th October, 2012 (ftalphaville.ft.com)
• China's inflation eases, giving room for stimulus (cnsnews.com)