China’s inflation slows as authorities hope to loosen

CONSUMER price inflation in China has slowed to its lowest level in 15 months, giving the government more room to tilt economic policy away from restraining prices and towards supporting sagging growth.

Prices rose by 4.1 per cent in the 12 months to December, down from 4.2 per cent in November.

The December figures was the closest that inflation came in 2011 to hitting the official target of four per cent for the year, leaving the average rate above five percent.

That is still too high for China’s conservative policymakers, who are reluctant to shift policy settings too quickly towards all-out growth mode and argue that fine-tuning is all that is required to keep the economy on a stable expansion path.

But evidence of slower economic growth is mounting, even while inflation is still not yet as tame as Beijing might like – trade grew at its slowest pace in two years in December.