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Business

Chinese consumer prices continue to fall

Latest update : 2009-05-11

According to official figures, consumer prices in China continued to fall in April for the third consecutive month. The index is now down 1.5% from a year ago, confirming fears of deflation amid an ongoing downturn.

AFP - China's inflation weakened further in April, with the consumer price index falling 1.5 percent from a year ago, the government said Monday.

Compared with a month earlier, the index, the main gauge of inflation, was down 0.2 percent, the National Bureau of Statistics said in a statement.

The continued decline in consumer prices comes as China struggles with the most serious economic slowdown in nearly two decades, brought about by the global financial crisis.

The deflation reflects the weaknesses in the economy over the past six months, Standard Chartered's China economist Stephen Green said in Beijing.

"At the moment, we are only in the midst of a very gradual U-shaped recovery. So that will have probably gradual effects on prices," Green said, adding he expected prices would be flat by the end of the year.

The index, or CPI, dropped by 1.6 percent in February, its sharpest fall since it fell nearly two percent during the Asian financial crisis a decade ago, HSBC's economist Qu Hongbin said in Hong Kong.

"It will last for at least another several months," he said, adding the deflation was mainly due to external factors such as falling commodity costs, which limits policymakers' ability to shore up prices.

"The focus will remain on how to enable the economy to recover as soon as possible and further boost domestic consumption and investment to offset declines in foreign demand," Qu said.

The World Bank has forecast that the Chinese economy, the world's third-largest, will expand by 6.5 percent this year, the lowest rate of growth since 1990.

In March, consumer prices were down 1.2 percent from a year earlier, according to previously released data.

In the first four months of the year, the consumer price index fell 0.8 percent from the same period in 2008, according to the bureau.

Date created : 2009-05-11

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