China's consumer inflation accelerated to a seven-month high of 3.1 percent in September, official data showed Monday, but the stronger-than-expected reading is not expected to challenge policymakers with strong commitments to restructuring reforms, economists said.
The consumer price index (CPI), the main gauge of inflation, rose to 3.1 percent year-on-year in September from 2.6 percent in August, the National Bureau of Statistics said Monday. This beat previous market estimations of roughly 2.9 percent.
Food inflation recorded a 1.5 percent gain from August to September, pushed up by the Mid-Autumn Festival and National Day holidays, and droughts and floods in some areas, Yu Qiumei, a senior statistician with the bureau said in a statement posted on the bureau's website on Monday.
Economists offer similar views on the reasons behind the CPI uptick, and they predict the reading is expected to see slight rises in the last few months of the year and throughout the next year.
A low base effect of last year would be the main factor driving up the CPI readings in months to come, Lu Ting, chief China economist at Bank of America Merrill Lynch in Hong Kong, told the Global Times on Monday.
The fourth quarter is forecast to record the highest price levels, according to Zhang Lei, a Beijing-based macroeconomic analyst with Minsheng Securities, who told the Global Times Monday that the CPI may continue a slight upward trend in 2014.
"But this won't be a concern for the government, as the overall price level is unlikely to be out of control," Zhang went on to say, downplaying the implications of CPI rises on the government's policymaking.
Rising inflation had once been a top concern for the Chinese economy in 2011, with government officials then repeatedly addressing the top urgency of containing consumer inflation. The CPI jumped by 5.4 percent year-on-year over the course of 2011, exceeding the official target of 4 percent for the year.
But even though September saw higher inflation, right after the announcement of a surprise slide in export growth for the month, general market sentiments remain calm.
"The September reading has not changed our viewpoints that near-term inflation levels remain benign," Zhu Haibin, chief China economist at JP Morgan Chase & Co in Hong Kong, said in a note sent to the Global Times on Monday.
JP Morgan expects the CPI reading for the whole year to be at 2.7 percent, far below the official target of 3.5 percent for the year.
Economists generally exclude the possibility of any changes in the government's policy stance, although the CPI reading has risen above the one-year benchmark deposit rate of 3 percent set by the central bank.
With the economic growth expected to be steadied above 7.5 percent for the whole year, the announcement of continued pro-growth measures is less likely, Lu at Bank of America Merrill Lynch said, adding the CPI rises, hardly dramatic, would not be sufficient for the government to turn to further tightened policies in order to rein in risks.
Sharing a similar vision, Zhang with Minsheng Securities remarked "the focus of monetary policy-setting has already been steered toward bolstering economic reforms aimed at rebalancing the economy."
President Xi Jinping and Premier Li Keqiang, during their recent visits to South East Asian nations, have reassured the market of short-term stability and longer-term sustainability of the Chinese economy, pledging all-round reforms and innovation despite global economic headwinds.
Meanwhile, the producer price index (PPI), the gauge of inflation at the wholesale level, continued to be in negative territory in September with a 1.3 percent fall year-on-year, according to the bureau's statistics on Monday.
This showed a decline at a slower pace than in August, when the PPI reading was down 1.6 percent from a year earlier.
"Factory price inflation will return to positive territory next year," Minsheng Securities' Zhang projected.