China’s inflation accelerated more than forecast to a seven-month high as the nation’s coldest winter in 28 years pushed up vegetable prices, a pickup that may limit room for easing to support an economic recovery.
The consumer price index rose 2.5% in December from a year earlier, the National Bureau of Statistics said today in Beijing. That compares with the 2.3% median estimate in a survey of economists and a 2% gain in November. The decline in the producer-price index eased to 1.9%.
Chinese stocks headed for the biggest drop in eight weeks on concern that the quickening in inflation makes further policy loosening less likely, after data yesterday on exports and credit growth underscored the strength of the economic rebound. One central bank academic adviser, said this week that price gains may become a concern in the second half.
Inflation may temporarily accelerate to more than 3% next month, the expert said, reflecting the impact of cold weather on food prices and the weeklong Chinese Lunar New Year holiday, which fell in January last year.
Food prices rose 4.2% in December from a year earlier, the most since May, the data showed. Vegetable prices increased 14.8% from a year earlier and contributed 57.5% to the total 0.8% month-on-month gain in the CPI, the bureau said. Pressure on food costs may ease after the holiday, it said in a statement.
Inflation pressure may be spreading to other parts of the economy. Prices of services rose 2.5% in December from a year earlier, the fastest rate since October 2011. Factory-gate prices of daily-use items increased the most since June.
Consumer inflation has held below Premier Wen Jiabao’s 2012 target of about 4% for 11 months, aiding the government’s efforts to engineer a growth recovery without triggering price gains. Producer prices dropped for the 10th month. For the full year, the CPI rose 2.6% while factory-gate prices declined 1.7%.
