Inflation in China may be ready to ease after the government tightened monetary policy in the closing weeks of 2010, with the latest manufacturing growth signaling a slowdown in price growth, according to Bloomberg. The purchasing managers index for China dropped in December to 53.9 from 55.2 the month before, and the report showed input prices also eased to close the year. Shen Jianguang of Mizuho Securities Asia said that modest growth was “welcome because overheating is a risk policymakers want to avoid.”
The manufacturing report put growth at a level below the prediction of all analysts that were polled by Bloomberg, and marked the first slowing of industrial production in five months. The inflation rate is expected to have eased to 4.8% in December from the 28 month high of 5.1% recorded the month before, but Jianguang still says “Another rate hike could come as soon as this month,” even after the bank raised rates twice in the fourth quarter and upped the bank reserve requirements.