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Inflation falls amid China's slowdown
Bill Condie10 Feb 2009
China's inflation rate is at its lowest since 2006, underlining the rapid slide in the country's economy.
Producer prices fell 3.3% in January - the most in nearly seven years - after a 1.1% decline the previous month, China's statistics bureau said today.
Consumer prices, meanwhile, rose 1% after gaining 1.2% in December.
Economists warn that Chinese New Year celebrations last month may have prevented an even bigger decline in the inflation rate thanks to crashing export demand.
Central bank Governor Zhou Xiaochuan said China may use interest rates and foreign-exchange policy to cut the nation's savings rate, boost consumption and sustain economic growth.
"Inflation could have been close to zero or worse if not for the Chinese New Year, because vegetable prices and grain prices went up," said Wang Tao, China economist at UBS in Beijing.
Falling metals and other commodity prices were the main cause of the fall in producer prices.
