December inflation slows to 4.1 percent

Chinese shoppers in the Wangfujing shopping district of Beijing. Inflation rose at its slowest pace in more than a year in December…

Chinese inflation rose at its slowest pace in more than a year in December, official data showed yesterday, giving Beijing leeway to further ease credit restrictions to spur economic growth.
The country’s consumer price index, a key gauge of inflation, rose 4.1 percent year on year in December, the National Bureau of Statistics said in a statement, compared with 4.2 percent in November.
For all of 2011, inflation stood at 5.4 percent, well above the government’s full-year target of four percent and higher than the 2010 rate of 3.3 percent, the data showed.
The December figure marked the fifth straight month that China’s inflation rate has slowed since peaking at a more than three-year high of 6.5 percent in July, as measures introduced to curb surging consumer prices took effect.
It was the lowest monthly level since September 2010 when inflation rose 3.6 percent, but slightly higher than the 4.0 percent rise analysts had expected, according to a Dow Jones Newswires survey.
Food prices – a key driver of inflation – rose 9.1 percent on year in December, compared with 8.8 percent in November, which analysts said was likely due to the unusually early Lunar New Year, which falls in January this year.
The holiday, also known as the Spring Festival, is the most important celebration on the Chinese calendar.
Retail sales typically soar ahead of the week-long break as people splash out on food, alcohol and other gifts for their families and friends.
Analysts said they expect Beijing to cut banks’ reserve requirement ratio – effectively increasing the amount of money they can lend – in the coming months as authorities shift their focus to spurring economic growth amid turmoil in Europe and the United States.