(Bloomberg) -- China’s factory inflation moderated in November from a 26-year high, with the slowdown providing more room for policymakers to support the economy.
The producer price index rose 12.9% from a year earlier, above economists’ forecasts of a 12.1% gain, data from the National Bureau of Statistics showed Thursday. The consumer price index increased 2.3%, the fastest pace since August 2020 but below the projected 2.5% gain.
The slowdown is a sign that the government’s efforts to tame soaring commodity prices and deal with power shortages over the past few months are having an effect. If the prices pressures continue to abate, it may provide more room for the central bank to add stimulus.
Consumer inflation sped up, as vegetable prices rose 30.6% while pork prices dropped 32.7%. Core CPI, which excludes more volatile food and energy prices, rose 1.2%, as sporadic Covid-19 outbreaks likely continue to weigh on services consumption.
The central bank acted to release 1.2 trillion yuan ($189 billion) into the economy, announcing Monday it would reduce most banks’ reserve requirement ratio by 0.5 percentage point from next week. While the central bank said this wasn’t the start of an easing cycle, financial markets are showing some expectation of further action.
The Communist Party’s top leaders also indicated earlier this week that their focus for the coming year is stabilizing macroeconomic conditions and signaled an easing of some property curbs next year, as a real estate downturn and sporadic virus outbreaks weigh on the economic outlook.
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