Chinese inflation rate rockets to 4.5%

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The inflation rate in China has increased from 4.1% in December to 4.5% in January.

The significant jump breaks an unenviable streak of five straight monthly declines.

The Chinese economy has weakened over the last few months and seasonal factors played a large part in fluctuating price pressures.

The Consumer Price Index rose by 4.5% from the previous year’s figures and this was largely due to the rebound in shopping before last month’s Chinese New Year.

This drastically pushed up the price of food and goods. The shopping blitz before the Chinese New Year was slower than expected this year, however, with most of the country shutting down for weeks at a time it has been hard to gauge the full extent of the damage.

The slowdown in production and manufacturing will ultimately have a knock-on effect on the economy, which is already being propped up by increased government intervention.

Speaking to the Financial Times, Ken Peng, an economist with BNP Paribas commented; “It is very likely that after the holiday, prices will come down, especially for food. Next month’s number should be lower and that will ease concerns.”

Whilst this may be a seasonal price increase, it is well above the market expectation, causing concerns for policymakers. The Chinese economy has been growing slowly as the central government is reluctant to take aggressive action to stimulate the economy.

The inflation rate for China is expected to average around 3.5% over the next 12 months, much lower than last year’s average of 5.4%.

Transfer Money to China

If you are looking to invest in China, think carefully about how you will be transferring money to China.

Foreign currency exchange rates quoted by banks are almost always worse than the exchange rates available through specialist currency dealers.

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Chinese inflation rate rockets to 4.5%

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