China’s Consumer Inflation Drops to Lowest Level in Two Years

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Dec. 11 – China’s consumer inflation rate dropped to 2.4 percent in November, the lowest rate in almost two years.

Food and energy costs eased as the government encouraged growth through spending without spurring price hikes, reports the AP.
November’s 2.4 percent inflation rate is lower compared to October’s 4 percent more so February’s 8.7 percent.

The lower inflation rate will give authorities the chance to implement more interest rate cuts and inject more investment into the economy. Last month, the government announced a US$500 million economic stimulus package to spend on more construction, tax cuts and aid.

The latest figures show that during the same period exports dropped by 2.2 percent while imports fell by 17.9 percent for China’s export-dependent economy.

The AP says that cooling inflation has eased pressure on consumers although the rapid decline risks that China may go into deflation, or a cycle of falling prices that depresses economic growth.