China inflation falls to 14-month low at 4.2%

Rate is still above government target of four per cent and increases concerns that economy may be headed for a slowdown.

    The increase of inflation over the past 14 months has seen the price of food increase in China [Reuters]

    China's consumer prices rose at their slowest pace in more than a year in November, as policy makers meeting this month to map out the direction for economic policies in 2012.

    The country's consumer price index, a key gauge of inflation, rose 4.2 per cent, the National Bureau of Statistics said in a statement on Friday.

    The rate was well below the 5.5 per cent recorded in October, but still slightly above the government's annual target of  four per cent.

    It was the slowest pace since September 2010, when inflation stood at 3.6 per cent.

    China last week cut the amount of money banks must hold in reserve for the first time in three years to spur lending and counter the turmoil in Europe and the US that threatens to derail the world's second-largest economy.

    The move was seen as an attempt to free up credit and encourage lending.

    Export-driven China has seen demand for its products shrink in recent months as consumers from Europe and the US cut back on spending due to the increasingly bleak economic outlook.

    Manufacturing activity in China contracted in November for the first time in 33 months, official data showed last week, fuelling concerns the economy was at risk of a hard landing which could trigger massive job losses.

    SOURCE: Agencies


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