China Jan. Consumer Prices Fell 1%, Accelerating Drop (Update3)
By Mike Forsythe and Alice Yuan
02/21 21:42
quote.bloomberg.com
Beijing, Feb. 22 (Bloomberg) -- China's consumer prices accelerated their decline in January as spending flagged and falling Asian currencies lowered the cost of imported goods, fueling expectations that interest rates may fall further.
The consumer price index fell 1 percent in January from a year earlier, following 0.3 percent declines in November and December, the National Bureau of Statistics said. The drop was the biggest since December 1999, according to Bloomberg data.
The report may prompt the central bank to cut key rates further after trimming them this week for the first time since June 1999, analysts said. The drop in prices may hold back corporate profits, especially among companies that compete with Japanese and Korean imports.
``China is importing deflation because other countries' currencies are depreciating against the yuan, including Japan's,'' said Jun Ma, an economist at Deutsche Bank AG in Hong Kong. ``I expect the central bank to make another rate cut if deflation worsens.''
The Japanese yen has declined 10.3 percent against the U.S. dollar in the past six months, pulling Asian currencies such as the South Korean won and the Taiwan dollar down with it, while the Chinese yuan is pegged to the U.S. currency. That makes goods imported from those countries cheaper for Chinese buyers. |
