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China Inflation Rises To 4.9Pc

Consumer price growth in China quickened during the first month of the year despite efforts from policymakers to slow inflation and prevent the economy from overheating, according to The Wall Street Journal.

Consumer price growth in China quickened during the first month of the year despite efforts from policymakers to slow inflation and prevent the economy from overheating, according to The Wall Street Journal. On Tuesday, the National Bureau of Statistics reported that the consumer price index in China increased 4.9% year-over-year in January, accelerating from 4.6% yearly growth in the last month of 2010. The inflation rate was estimated separately by the Wall Street Journal to be 5.1% using the government’s previous method for calculating the CPI.

The latest figure reflects an excessive amount of capital in the system according to Lu Feng of Peking University, who said “excessive money largely goes to asset markets, so it boosts asset prices and can even result in asset bubbles.” The headline figure also downplays the impact of inflation on ordinary Chinese people, with food and housing prices having a lesser effect on the CPI reading. Food prices were seen 10.3% higher year-over-year, marking the fourth consecutive month about 10%. The rapid price growth comes despite three interest rate increases by the central bank since October, although the benchmark interest rate is at 6%, which is only slightly above inflation.

Click here to read the story from The Wall Street Journal.

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