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China's Nov CPI drops to 22-month low

By Wang Xu (chinadaily.com.cn)
Updated: 2008-12-11 10:08

A vendor sells vegetables at a street-side market in Beijing, October 24, 2008. China's consumer price index (CPI), the main gauge of inflation, rose at a slower annual rate of 2.4 percent in November, the National Bureau of Statistics said on Thursday.[CFP]

Special coverage: Trends & Policies  Interest Rate Cut  Related readings:  China's CPI projected to slide further  China CPI eases to 4% in October

China's inflation eased to a 22-month low in November, giving room for the government to introduce further interest rate cuts to boost the economy.

The consumer price index (CPI) rose 2.4 percent year-on-year in the past month, down from 4 percent in October, the National Bureau of Statistics said Thursday morning.

Falling food prices are the main factor contributing to the moderation of consumer inflation, after it peaked at 8.6 percent in February. Food prices, which account for one-third of the CPI basket, fell 1 percent from a month ago.

Wednesday's producer price index figures showed that wholesale inflation also dropped to a 31 month low of 2.0 percent year-on-year in November. Both inflation barometers indicate an imminent rebound of consumer prices is unlikely.

"We believe there is further scope for the central bank to ease monetary policy in an effort to avoid an excessive slowdown and stave off deflation," said Jing Ulrich, JP Morgan chairman for China Equities.

China's central bank has cut benchmark lending rate by 1.89 percentage points since September to 5.58 percent, trying to use "moderately loose" monetary policy to boost the economy.