- Julian Evans-Pritchard, China economist at Capital Economics
China consumer inflation picked up last month, due to price gains for food and services, suggesting demand in the world's second biggest economy is strengthening after introduction of fiscal stimulus and interest-rate cuts. The consumer-price index rose 1.5% in November from a year earlier, the National Bureau of Statistics reported, following the 1.3% gain in October. The main driver for the CPI increase were rising food prices, as vegetable prices surged 9.4% year-on-year, while prices for meat and poultry products soared 6.2%. At the same time the producer price index dropped 5.9% versus the projected 6% decrease, extending declines to a record 45 months.
Earlier this week, China reported lower than expected trade surplus in November, as exports plunged 6.9% year-on-year in US dollar terms while imports fell 8.7% at the same time. Although exports dropped more than expected last month, imports surprised on the upside declining much less than expected 11.9% decline, signalling domestic demand is stabilizing after six central bank interest rate cuts since November last year and expanded government spending. China's economy is expected to mark a 7% economic growth rate this year, still the weakest pace in 25 years.
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