China’s Inflation Unexpectedly Accelerated In January

by Bloomburg News

China’s inflation unexpectedly accelerated in January on the boost to spending from a weeklong holiday, limiting the room for monetary easing as Europe’s debt crisis damps exports and the property market cools.

Consumer prices rose 4.5 percent from a year earlier, the National Bureau of Statistics said on its website today. That was more than all 33 forecasts in a Bloomberg News survey of economists and a median of 4 percent.

Inflation quickening for the first time in six months adds pressure on officials to refrain from any immediate additional cut in banks’ reserve requirements. The government may wait to see data free from holiday distortions as UBS AG predicts price gains may cool to below 4 percent this month and Bank of America Corp. estimates about 3.3 percent.

“This cuts into the room for monetary policy easing for now,” said Yao Wei, a Hong Kong-based economist with Societe Generale AG. “However, inflation should resume its decline in February and beyond.” (Full Story)

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