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China inflation rate below target at 2.6% in 2013: official data

BEIJING -- China's inflation rate was 2.6 percent in 2013, official data showed Thursday — well below the 3.5 percent target set by the government in the world's second-biggest economy.

The figure for the consumer price index (CPI), a main gauge of inflation, released by the National Bureau of Statistics (NBS) was unchanged from 2012.

Analysts broadly welcomed the statistics, saying they pointed to a stable outlook for prices and a reduced chance of monetary tightening.

Inflation has slowed markedly since 2011, when annual CPI spiked to 5.4 percent.

The second year in a row of benign inflation data came as China's economy showed some signs of strength in the second half of last year, after a growth slowdown during the first six months.

For the month of December, inflation came in at 2.5 percent compared with the same month the year before, slowing from the 3.0 percent year-on-year figure registered in November.

The December result was the same as the median increase of 2.5 percent predicted in a survey of 13 economists by Dow Jones Newswires.

Bank of America Merrill Lynch economists Lu Ting and Zhi Xiaojia said the CPI figure bodes well for managing liquidity conditions in China, which were volatile last year.

“Subdued inflation would be supportive of a neutral monetary (policy) rather than tightening,” they said in a research note.

They emphasized that over the past two months markets have shown concern over whether the central bank, the People's Bank of China, would tighten credit supply if CPI rises approached the government's 3.5 percent target.

“We thus believe a well-below 3.0 percent CPI inflation could be good news for the markets as monetary tightening is not justified,” they said.

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