China Inflation Ticking Upwards
China released it's February inflation figures showing that CPI had increased
2.7% year over year in February, against expectations for 2.5%, and the January
figure of 1.5%. The figure shows a trend of increasing inflation in China, and
may make China's goal of keeping inflation at 3% in 2010 somewhat difficult. The
key drivers of inflation include rising commodity prices, artificially low
currency, large stimulus spending, loose monetary and credit conditions, as well
as generally high inflation expectations.
Given the goals that the Chinese government has around inflation targets this
year, and the initial steps taken toward tightening (increasing the Required
Reserve Ratio by 50bps twice) it is likely that we will see more tightening in
the near term if more data turns out like this.
Sources:
National Bureau of Statistics www.stats.gov.cn Econ Grapher Analytics
www.econgrapher.com
Article Source: http://www.econgrapher.com/12marchinacpi.html
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