December 10, 2008

China November inflation drops sharply

China said Thursday its annual inflation rate slowed to 2.4 percent in November, the seventh straight month of decline.

The National Bureau of Statistics said the November consumer price index compared with 4 percent in October and February's 12-year-high of 8.7 percent.

November's 2.4 percent also was the lowest since January 2007.

The agency said food prices, which account for more than a third of China's CPI, rose 5.9 percent from year-ago levels, down from 8.5 percent in October and 9.7 percent in September, Xinhua reported.

The easing of inflation also was the result of the decline in world commodity prices and sluggish global demand, the report said.

In the first 11 months of this year, the inflation indicator rose 6.3 percent year-on-year. China has come around from the start of the year when the concern was overheating of the economy.

Economist Zuo Xiaolei said the November numbers were as expected, Xinhua said.

On Wednesday, China said the November producer price index or wholesale price inflation fell sharply to an annual rate of 2 percent, the slowest increase since May 2006.

Zuo predicted China's CPI would go down further in December, saying the inflation rate for all of 2008 would be less than 5 percent or about the same as 4.8 percent in 2007.

However, such inflation slowdown also can set off deflation.

Without proper policy support, deflation would be highly possible, she warned.