China Inflation Growth Will Likely Moderate

Despite rising food and oil prices, China’s inflation growth will likely moderate in January due to a high base a year ago, the Bank of Communications said in a report.

BOCOM predicted the consumer price index, a main gauge of inflation, will inch down to 1.4% year on year in January from the 1.8% growth in the previous month, Xinhua reported.

Food prices saw marked growth from a month ago as rain and snow across the country dampened the output of vegetables and other farm produce, according to the report.

Meanwhile, price spikes in domestic refined oil drove up the CPI’s non-food sub-index as global crude prices hit the highest level in nearly three years last month.

But January’s CPI will still moderate year on year as the price increases were offset by a high base in the same period of 2017, when consumer prices picked up by the fastest pace in two and a half years.

China’s inflation has remained subdued since last February, mainly due to stable food prices, with the full-year growth at only 1.6%, below the government’s annual inflation regulation target of around 3%.

BOCOM expects consumer prices to continue the mild trend this year with an increase of 2%.

 Shifting Focus

Meanwhile, after decades of speedy advances, China is shifting its economic focus to high-quality development, with “developing a modernized economy” high on the agenda.

Now an economic catchphrase, the idea provides a blueprint for the world’s second largest economy during the next five years and beyond.

It will be embodied in innovation-driven industries with coordinated development, an open and fair market, efficient and fair income distribution, coordinated urban-rural and regional development, energy conservation and environmental friendliness, and an open economy with higher standards.

Efforts will be made to give full play to the role of the market, while the government is expected to play a better part.

The real economy, once outshone by rampant real estate prices and financial speculation, has again gained traction.

To develop a modernized economy, China should channel more energy into improving the quality of supply and grow into a manufacturing powerhouse, said Wang Yiming, deputy director of the development research center of the state council.

The government has rolled out an array of measures such as “Made in China 2025” and “Internet Plus” strategies, he said.