China’s Inflation Soars to 16-mth High

Bloomberg reports:

China’s reached a 16-month high, industrial output climbed and new loans exceeded forecasts, adding to the case for the
government to pare back stimulus measures.

Consumer prices rose 2.7% in February from a year earlier, the National Bureau of Statistics said in Beijing on Thursday, compared with the 2.5% median estimate of 29 economists surveyed by Bloomberg News. Seasonal factors stemming from a weeklong holiday may have boosted prices. Production rose 20.7% in the first two months of 2010, the most in more than five years.

Premier Wen Jiabao aims to hold full-year inflation around 3% after banks flooded the financial system with money to drive a rebound from the global recession. Gross domestic product grew 10.7% last quarter and central bank Governor Zhou Xiaochuan said March 6 that anti-crisis policies, including the yuan’s peg to the dollar, must end “sooner or later.”

See also “China’s Swan Song” from Paul Krugman.


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