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China Inflation Near 8-Year High; PPI Continues To Fall

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China's consumer price inflation accelerated to the highest since early 2012 in November as disruption to pork supply pushed up food inflation, data from the National Bureau of Statistics showed Tuesday.

Another report from NBS showed that producer prices declined for the fifth consecutive month in November.

Consumer price inflation rose more-than-expected to 4.5 percent in November from 3.8 percent in October. This was the highest since January 2012. Prices were expected to advance 4.3 percent.

Food prices surged 19.1 percent annually in November. Pork prices increased sharply by 110.2 percent as the African swine flu dramatically reduced pig population causing disruption to the supply. At the same time, non-food prices gained only 1 percent.

The pick-up in food inflation will reverse soon and broader demand-side price pressures remain weak, Julian Evans-Pritchard and Martin Rasmussen, economists at Capital Economics, said.

Robert Carnell, an ING economist said inflation rates should now have peaked and the coming months will see measured inflation drop steadily.
Excluding food and energy, core inflation moderated to 1.4 percent in November, data showed.

On a monthly basis, consumer price inflation eased to 0.4 percent from 0.9 percent in October.

Producer prices were down 1.4 percent annually but slower than the 1.6 percent decrease seen in the previous month. Economists had forecast a 1.5 percent drop for November.

On month, producer prices fell 0.1 percent, offsetting a 0.1 percent rise in October.

While base effects could lead the year-on-year contraction in producer price inflation to ease in the coming months, factory-gate prices are likely to continue falling in on a monthly basis, economists at Capital Economics noted. Together with easing food inflation, this should strengthen the case for further monetary easing, economists noted.

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