China CPI rises 2.6 pct in 2013

China's consumer price index (CPI) grew 2.5 percent year on year in December, and 2.6 percent for the whole of 2013, well below the government's full-year target of 3.5 percent, the National Bureau of Statistics (NBS) said Thursday.

December's CPI, a main gauge of inflation, was 0.5 percentage points lower than the previous month.

December's inflation was 2.5 percent in both cities and rural areas. Food prices, which account for roughly a third of CPI, rose 4.1 percent in December from a year ago, while non-food products edged up 1.7 percent.

In the category of food, fruit, aquatic products, grain, pork, beef, mutton, milk and fresh vegetables all rose year on year in December. Fruit prices led the charge by jumping 15.6 percent from a year ago. Both egg and oil prices contracted by 4.1 percent year on year.

Rents went up 4.7 percent year on year in December. Prices of telecom equipment dropped notably by 6 percent from a year ago.

On a month-to-month basis, December CPI edged up slightly by 0.3 percent from November. Food prices increased 0.6 percent from November while prices of non-food products were up 0.1 percent, according to the NBS.

The producer price index (PPI). which measures inflation at the wholesale level, fell 1.4 percent year on year in December. Annualized PPI for 2013 fell 1.9 percent year on year, the NBS data showed.

Yu Qiumei, a senior statistician with the NBS, said the notable decline of December's CPI on a year-on-year basis was partly attributable to the high comparison base in December of 2012.

Lu Ting and Zhi Xiaojia, China economists with Bank of America Merrill Lynch, said China's December CPI inflation fell more than expected to 2.5 percent year on year from 3.0 percent in November, lower than market expectations of 2.7 percent.

The lower-than-predicted CPI was due to lower food inflation, as this fell to 4.1 percent from 5.9 percent in November, Lu and Zhi said in a research note.

Notably, fresh vegetable price inflation slumped to 2.6 percent in December from 22.3 percent in November, contributing eight basic points to the 2.5-percent CPI in December, compared to 59 basic points to the 3.0-percent CPI in November, they said.

Meat price inflation fell to 3.6 percent year on year from 5.5 percent in November. Within the meat category, pork price inflation dropped to 1.6 percent from 5.0 percent the previous month.