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China's inflationary pressure expected to be subdued in 2019

2019-01-28 10:48:30 Global Times

There's a low chance of inflation in China this year and although the producer price index (PPI) may increase in the first quarter of the year, it may eventually taper off later, an expert said on Saturday.

The situation is mainly due to the fact that the prices of international crude oil and commodities have decreased, and investment demand and consumer demand remain weak. These factors make the risk of inflation low, Lian Ping, chief economist from Bank of Communications, said in a note sent to the Global Times.

Meanwhile, the central bank has vowed to avoid a flooding of liquidity and will maintain a stable macro-leverage ratio, making inflation less possible, he added.

Figures from the National Bureau of Statistics (NBS) showed that the consumer price index (CPI) in December rose by 1.9 percent year-on-year, a decrease of 0.3 percentage points from the previous month, and the PPI rose by 0.9 percent year-on-year, 1.8 percentage points lower than in the previous month. "The year-on-year increases in the CPI and PPI both narrowed in December, indicating weak demand and insufficient industrial production," Lian said.

However, Tian Yun, vice president of the Beijing Economic Operation Association, warned that there is more possibility of deflation this year as the ongoing trade dispute between China and the US still casts a shadow over the economy, and there have been no clear financial tools coming out, pushing up the uncertainties.

China reported GDP growth of 6.6 percent year-on-year in 2018, above the official target of about 6.5 percent, the NBS said recently.

The country will implement a proactive fiscal policy and prudent monetary policy, Ning Jizhe, head of the NBS, said.

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