Tags: Chinese | Inflation | Rates

Poll: Chinese Brace for More Inflation, Higher Rates

Thursday, 16 Dec 2010 08:20 AM

More Chinese households see inflation accelerating from 28-month highs, quarterly polls from the central bank showed, and that is feeding expectations for a further tightening in monetary policy.

More than three quarters of businesses surveyed also said they believed raw material prices would increase.

The poll results were a nod to market expectations that the People's Bank of China (PBOC) may raise benchmark deposit rates by 25 basis points to 2.75 percent as soon as this month to rein in rising prices.

Inflation is a sensitive point for the ruling Communist Party as it has fuelled public anger against it in the past. So far, there are no signs that rising prices are fuelling public unrest but the surveys suggested dissatisfaction is on the rise.

PRICES TOO HIGH

The central bank's poll of 20,000 households across 50 cities showed only 14 percent of respondents were happy with the level of prices, the lowest since the survey was started in the fourth quarter of 1999. Annual inflation hit 5.1 percent in November.

The poll showed 74 percent thought prices were "high and unacceptable", up nearly 16 percentage points from the previous quarter; 81.7 percent thought inflation would accelerate in coming months, up 8.5 percentage points from last quarter.

On housing prices, 76 percent thought prices were "high and unacceptable", the highest since the survey started polling for satisfaction on property prices in the first quarter of 2009.

TIGHTER POLICY SEEN

A poll of 2,900 commercial banks in China showed 49.9 percent of bankers thought monetary policy would be tightened, up 23.1 percentage points from the previous survey. Only a slim 8.3 percent thought policy will stay loose.

In line with the majority belief that policy could tighten further, more bankers thought the Chinese economy was "leaning towards over-heating" or "over-heating". The poll showed nearly 45 percent thought so, up 27 percentage points from last quarter.

Those who thought the Chinese economy was growing at a "normal" pace fell 21.4 percentage points to 49.9 percent.

BUSINESSES CONFIDENT

The survey of 5,000 businesses showed the number indicating they were "confident" dipped 5.2 percentage points to 74.2 percent, a level last seen in the second quarter of 2007.

Yet, an index for business climate rose for the seventh straight quarter to 71.3 percent, near a record for the series.

But the poll suggested businesses were feeling the squeeze from rising prices, too. Nearly 76 percent expected prices of raw materials to rise, up 8.1 percentage points from the last quarter.

© 2017 Thomson/Reuters. All rights reserved.

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More Chinese households see inflation accelerating from 28-month highs, quarterly polls from the central bank showed, and that is feeding expectations for a further tightening in monetary policy. More than three quarters of businesses surveyed also said they believed raw...
Chinese,Inflation,Rates
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2010-20-16
 

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