Inflation Heats Up In China

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BEIJING (Reuters) – China’s annual consumer inflation sped to 2 per cent in November from 33-month lows, data showed on Sunday, dampening the chance for further policy easing as the economy recovers.Economists polled by Reuters had forecast November inflation to climb to five-month highs of 2.1 per cent, compared with October’s 1.7 per cent.

The National Bureau of Statistics said in the same release China’s producer price index dropped 2.2 per cent in November from a year ago, narrowing from October’s 2.8 per cent annual fall but sharper than forecasts for a 2 per cent decline.

A recovery in factory-gate prices bodes well for China’s corporate sector, which has been battling falling profits.

Sunday’s price data support earlier indications that China’s economy is finally stirring from a slump stretched over seven straight quarters, thanks in part to the central bank’s policy loosening.

To reinvigorate economic growth, the central bank cut interest rates twice this year, lowered banks’ reserve requirements by a 100 basis points, and pumped cash into the banking system.

(Reporting by Koh Gui Qing and Aileen Wang; Editing by Paul Tait)

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