- Ma Xiaoping, economist at HSBC
China's consumer and producer price pressures remained relatively subdued in December due to slump in global oil prices. Consumer inflation in the world's second biggest economy rose 1.5% from the previous year, compared with November's 1.4% growth, the National Bureau of Statistics reported. The pickup in prices largely reflected a slightly faster pace in food-price growth, with the consumer-price index climbing 2% for all of 2014, markedly below the government's 3.5% goal and representing the smallest uptick in five years. Fortunately, the risk of consumer-price deflation in China is much lower than in other major economies including Japan and Europe, and economists forecast that falling oil prices will help to underpin consumption in China, thereby providing a boost to GDP growth. Separately, the Producer Price Index, which measures prices of goods at the factory gate, plummeted 3.3% in December following a 2.7% decline in the previous month, marking the 34th straight month of producer-price deflation in China. The world's second biggest economy has been showing slower growth in recent years, and the 2014 GDP growth could fall short of the government's official goal of about 7.5%. The nation's economy expanded 7.3% in the third quarter of last year, the weakest growth pace in over five years. A weak real estate sector and disappointing growth in manufacturing have been the main reason behind the weaker growth picture.
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