China's consumer price inflation clung near a 12-year high in April, maintaining pressure on the government to stick to its tight policy stance despite softening global growth.
For authorities who have insisted their priority is to tackle price rises, the quickening of annual inflation to 8.5 per cent from 8.3 per cent in March will be frustrating, while there is also a glimmer of optimism.
'This isn't something the government will necessarily panic about, particularly as food prices are now beginning to fall,' said Paul Cavey, economist at Macquarie Securities in Hong Kong.
Apart from February's reading of 8.7 per cent, inflation was last higher in May 1996, when the rate was 8.9 per cent.
Food prices, which make up a third of the consumer basket, have been the overwhelming driver of inflation.
They rose 22.1 per cent in April from a year earlier, though weekly government reports on fresh food prices have showed a slight dip in May.
Non-food prices rose 1.8 per cent in April from a year earlier, the same as in March.
'Greater prominence needs to be given to curbing inflation and controlling price rises,' the National Bureau of Statistics said in a statement accompanying the inflation data.
A torrent of money has gushed into China from record trade surpluses, threatening to push inflation still higher, but the latest trade data, also published on Monday, showed the global downturn was offering it a respite.
China recorded a trade surplus of US$16.7 billion in April, fractionally lower than the same month last year, though the slowdown was sharper in local currency terms.
Imports grew faster than exports, as they have done every month since October, apart from March.
'The rest of the world is slowing and of course it should be reflected in China's export growth. This should help China's economy cool off,' Qing Wang, Morgan Stanley economist in Hong Kong, said.
Focus on inflation
Zhou Xiaochuan, China's central bank governor, said on Saturday that the country would give precedence to tackling inflation over targeting growth or employment.
Even as easing food prices give some grounds for hope, pipeline pressures have built up with the producer price index, or factory-gate inflation, hitting a three-and-a-half year high of 8.1 per cent in April.
'As underlying inflationary pressures remain undiminished, it is vital for the government to keep its tightening policy stance to anchor inflationary expectations,' Hong Liang and Yu Song, Goldman Sachs economists in Hong Kong, said in a client note.
The government declared it would tighten monetary policy this year to fight inflation, but it has yet to raise interest rates after six increases in 2007.
Instead, it has drawn on an array of tools, from bank lending curbs to faster yuan appreciation - the central bank on Monday set the highest daily reference rate for the yuan , 6.8920 per dollar, since it ended a fixed peg to the US currency in July 2005.
'Many had expected the CPI to ease in April, but the figure is not so terrible because it's still mainly caused by food items,' said Feng Yuming, an analyst with Orient Securities in Shanghai. 'I don't think the government will tighten monetary policy further simply because of the figure.'
The 8.5 per cent reading was in line with a Reuters report last Thursday based on information from sources familiar with the data. Economists had expected a rate of 8.3 per cent.
The government set a target of 4.8 per cent for average inflation in 2008, but in recent weeks a series of officials have said the real number would very likely top that.
Jan-April FDI rises 59.3%
China drew US$35.02 billion in foreign direct investment (FDI) in the first four months, 59.3 per cent more than a year earlier, the Commerce Ministry said on Monday.
In April alone, China attracted US$7.6 billion in FDI, up about69 per cent from a year earlier, according to calculations basedon the year-to-date data published on the ministry's website.
China attracted US$74.77 billion in non-financial FDI in 2007, an increase of 13.6 per cent from 2006.
Inflows have surged since the country joined the World Trade Organisation in late 2001, despite increasingly stringent rules governing foreign investment.
For authorities who have insisted their priority is to tackle price rises, the quickening of annual inflation to 8.5 per cent from 8.3 per cent in March will be frustrating, while there is also a glimmer of optimism.
'This isn't something the government will necessarily panic about, particularly as food prices are now beginning to fall,' said Paul Cavey, economist at Macquarie Securities in Hong Kong.
Apart from February's reading of 8.7 per cent, inflation was last higher in May 1996, when the rate was 8.9 per cent.
Food prices, which make up a third of the consumer basket, have been the overwhelming driver of inflation.
They rose 22.1 per cent in April from a year earlier, though weekly government reports on fresh food prices have showed a slight dip in May.
Non-food prices rose 1.8 per cent in April from a year earlier, the same as in March.
'Greater prominence needs to be given to curbing inflation and controlling price rises,' the National Bureau of Statistics said in a statement accompanying the inflation data.
A torrent of money has gushed into China from record trade surpluses, threatening to push inflation still higher, but the latest trade data, also published on Monday, showed the global downturn was offering it a respite.
China recorded a trade surplus of US$16.7 billion in April, fractionally lower than the same month last year, though the slowdown was sharper in local currency terms.
Imports grew faster than exports, as they have done every month since October, apart from March.
'The rest of the world is slowing and of course it should be reflected in China's export growth. This should help China's economy cool off,' Qing Wang, Morgan Stanley economist in Hong Kong, said.
Focus on inflation
Zhou Xiaochuan, China's central bank governor, said on Saturday that the country would give precedence to tackling inflation over targeting growth or employment.
Even as easing food prices give some grounds for hope, pipeline pressures have built up with the producer price index, or factory-gate inflation, hitting a three-and-a-half year high of 8.1 per cent in April.
'As underlying inflationary pressures remain undiminished, it is vital for the government to keep its tightening policy stance to anchor inflationary expectations,' Hong Liang and Yu Song, Goldman Sachs economists in Hong Kong, said in a client note.
The government declared it would tighten monetary policy this year to fight inflation, but it has yet to raise interest rates after six increases in 2007.
Instead, it has drawn on an array of tools, from bank lending curbs to faster yuan appreciation - the central bank on Monday set the highest daily reference rate for the yuan , 6.8920 per dollar, since it ended a fixed peg to the US currency in July 2005.
'Many had expected the CPI to ease in April, but the figure is not so terrible because it's still mainly caused by food items,' said Feng Yuming, an analyst with Orient Securities in Shanghai. 'I don't think the government will tighten monetary policy further simply because of the figure.'
The 8.5 per cent reading was in line with a Reuters report last Thursday based on information from sources familiar with the data. Economists had expected a rate of 8.3 per cent.
The government set a target of 4.8 per cent for average inflation in 2008, but in recent weeks a series of officials have said the real number would very likely top that.
Jan-April FDI rises 59.3%
China drew US$35.02 billion in foreign direct investment (FDI) in the first four months, 59.3 per cent more than a year earlier, the Commerce Ministry said on Monday.
In April alone, China attracted US$7.6 billion in FDI, up about69 per cent from a year earlier, according to calculations basedon the year-to-date data published on the ministry's website.
China attracted US$74.77 billion in non-financial FDI in 2007, an increase of 13.6 per cent from 2006.
Inflows have surged since the country joined the World Trade Organisation in late 2001, despite increasingly stringent rules governing foreign investment.
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