Tuesday, February 10, 2009

China Inflation Falls to 30-Month Low

With dollar strength the Chinese central bank has had less need to print remnbi. Thus, easing the inflationary pressures in China.

Of course,the Fed is printing money at record rates which will ultimately weaken the dollar and further Chinese money printing in a futile attempt to support the dollar.

The consumer price index was up 1 per cent last month from the same period a year earlier, 0.2 percentage points less than in December, the Chinese government said. The producer price index dropped 3.3 per cent year-on-year, a sharper fall than the 1.1 per cent recorded a month earlier.

A 4.2 per cent year-on-year jump in food prices was the only reason the CPI growth rate was still positive in January. Consumer prices excluding food prices decreased by 0.6 per cent year-on-year, the National Bureau of Statistics said.

Those warning of deflation have no clue as to the inflationary impact that a crashing dollar is goiing to have on the country, given China's wrong headed attempt to support the dollar.


  1. Do we trust these inflation figures (for China)? In accountable democracies like our own such figures are suspect. How much more are they in dictatorships like China? Or have they reformed themselves more radically than I thoguht over the last 10/20 years?

  2. Good point. It always makes sense to be suspicious of government stats. However, the general trend of Chinese inflation data over recent years has been in line with what you would expect, given other international data, such as trade figures, dollar performance etc.

    I think that, at present, they are playing it pretty straight.