China’s consumer price index (CPI), a main gauge of inflation, rose 2.2 percent year-on-year in November, down from 2.5 percent in October. The producer price index (PPI), which measures costs for goods at the factory gate, rose 2.7 percent yearly in November, while edging down 0.2 percent on a monthly basis, the National Bureau of Statistics said on December 9.
Sun Chao, a researcher at the International Monetary Institute at Renmin University of China, wrote for the 21st Century Business Herald that falling prices for vegetables and slacked demand for pork have helped ease consumer prices in China. However, the price of pork will probably rise in the near future.
Also, weak international oil prices are also pulling down CPI. In November, NYMEX crude oil prices fell by 17.9 percent, while domestic gasoline and diesel prices respectively fell by 4.9 percent and 5.2 percent.
The slight slide in PPI was mainly due to falling commodity prices. Oil and natural gas prices declined significantly, reflecting weak international prices for oil and chemical raw materials. Since winter, an easing of environmental protections has reduced production costs, but demand for some products diminished and prices were reduced.
Sun said CPI in December will remain stable because despite an uptick in demand ahead of the Christmas and New Year holidays, demand for non-food products will be weak. Fluctuations in international crude oil prices will be major variables in the next few months, Sun added.
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