Lower CPI, PPI won’t cause looser monetary policy  

Beijing (CNS) -- The lowered consumer price index (CPI) and producer price index (PPI) released by the National Bureau of Statistics (NBS) on Monday will not make the government loosen the current monetary policy, financial experts say.

China's CPI rose 1.9 percent year-on-year in September, a slight increase on the pace of growth registered in August, when the index rose by 2.0 percent compared to 12 months earlier, the bureau said.

On average from January to September, overall consumer prices were up by 2.8 percent over the same period last year, according to NBS data.

Qu Hongbin, HSBC's chief economist for China, said that the slight increase of food prices counteracted the considerable increase of non-food prices, leading to the mild CPI data. With the increasing domestic demand, the CPI may rebound in the following months, Qu said, adding that the inflation risk may remain low as a result of the current economy and adequate food supplies.

Due to the huge impact of the periodic fluctuation of pork prices on the CPI, we should consider the time and influence of pork prices rebounding, said Ba Shusong from the Research Institute of Finance (Development Research Center of the State Council).

The NBS also said that China's PPI dropped 3.6 percent year-on-year in September, the lowest in the last three years, marking the seventh straight month of decline since March.

The PPI's continuous drop shows that pressure has increased on enterprises to make profits, and that decline in profits may continue for a while, said Ba.

Fan Jianping, director of the Economic Forecast Department of the State Information Center, said that the PPI's slight drop on a month-on-month basis should also be noted, as it can reveal the latest changes and trends better than a year-on-year basis.

Patience is needed when the economy is approaching the bottom, and loosening monetary policy in haste may lead to inflation in the future, Fan said.