China’s inflation falls to 2.5 percent in December

China inflationAccording to the latest figures released, China's annual consumer inflation has fallen to 2.5 percent in December, which is its lowest level in seven months. The inflation in the world's second largest economy was recorded at 3 percent during the month of November.

Experts have said that there are concerns that the monetary policy tightening might be affecting the liquidity in the country. There are indications that the People's Bank of China (PBOC) is targeting bank liquidity conditions in order to reduce debt levels and contain credit growth but is unlikely that the central bank will change its entire strategy. Experts have warned that market-oriented reforms to liberalise energy and utility prices might push up inflation in the country during the coming year.

The central bank of the second largest economy in the world has said that it will maintain its easy monetary policy in 2014 and support reasonable money and credit growth in order to boost economic growth in the country. Experts have said that as the inflation remains lower, the policymakers will have more freedom to continue focusing on policies to support growth.




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