China inflation eases to 2.5 percent in DecemberBy AP News Jan 09, 2014 11:22AM UTC
BEIJING (AP) — China’s inflation rate eased in December to 2.5 percent amid signs the world’s second-largest economy might be cooling.
The consumer price rise reported Thursday was down from November’s 3 percent. Inflation for the full year of 2013 was 2.6 percent, below the ruling Communist Party’s target of 3.5 percent.
Lower inflation could ease pressure on Chinese leaders as they try to focus on promised reforms aimed at making the economy more productive and keeping growth strong.
China’s economic growth dropped to a two-decade low of 7.5 percent in the second quarter of last year. It rebounded the following quarter but analysts say the recovery is likely to fade.
Manufacturing declined in December, which some analysts said suggests growth already is weakening.
Chinese leaders promised in November to open government-dominated industries wider to private competitors, though they said state ownership will remain the core of the economy.
The December consumer price rise was driven by a 4.1 percent increase in food costs. The price of fresh fruit rose 15.6 percent but increases for other commodities were modest.
Producer prices, measured as goods leave the factory, fell 1.4 percent from a year earlier in a reflection of slack demand. For the full year, producer prices fell 1.9 percent.
The government is trying to reduce reliance on trade and investment by encouraging domestic consumption but consumer spending is growth more slowly than leaders hope.
Beijing is in the midst of a marathon campaign to reduce excess production capacity in industries including steel, solar panels and cement in which supply exceeds demand. That glut of production has led to price-cutting wars that have forced some companies into bankruptcy.