China’s consumer prices grew 4.2 percent

By Kim Young-gyo

China’s consumer prices grew 4.2 percent in November from a year earlier, government data showed Friday, indicating inflation in the world’s No. 2 economy has eased.

The growth rate of the country’s consumer price index was down from a 5.5 percent on-year rise in October, according to the data released by the National Bureau of Statistics. It marks the first time since February that the figure fell below the 5 percent mark.

Meanwhile, China’s producer price index, a major measure of inflation at the wholesale levels, rose 2.7 percent on-year last month, significantly lower than a 5 percent increase a month earlier, the data showed.

Inflation in the world’s No. 2 economy peaked in July, when consumer prices rose to a 36-month high of 6.5 percent, driven mostly by a rise in food prices.

Many analysts said China may have started to ease its tightening mode as the country sees less inflationary pressure.

In a move seen by many as the official start of China’s monetary easing, the central People’s Bank of China (PBOC) announced last week a 50 basis points cut in required reserve ratios.

The ratio refers to the percentage of customer deposits banks are required to set aside in cash. If the central bank cuts the ratio, local commercial banks will have more room to extend loans.

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