China’s inflation slows in November

Inflation is running at a two year low in China, which has given the central bank room to cut interest rates further.

During the first two months of the fourth quarter till November consumer prices have increased by 2.4 percent compared to 2007.

It is predicted that China is likely to begin a period of highly aggressive rate cuts after 11 years of high food prices, now policy makers no longer have to fight against inflation and are now trying to protect economic growth, falling profits and global demand struggling.

According to the National Bureau of Statistics overall food prices are up 5.9 percent although the nation’s staple meat pork has increased by 9.3 percent.

The government has finally been able to remove food price controls at the start of the month as leaders and policymaker’s have targeted this problem with anti inflation campaigns working with farmers and cutting taxes.

It seems as though deflationary pressures are increasing as recession deepens Chinese manufacturers are going to find it increasingly tough to sell their products as so manufacturers are going to target the surplus to domestic customers which will in turn dampen domestic prices further.

Last month China announced a 586-billion-dollar stimulus package aimed at boosting domestic demand in order to counter the fallout form the global economic situation.

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