By Bloomberg News
June 10 (Bloomberg) — China’s consumer prices fell for a fourth month, making it easier for the government to keep interest rates low and boost spending to revive the world’s third-largest economy.
Prices dropped 1.4 percent in May from a year earlier, after falling 1.5 percent in April, the statistics bureau said today. The median estimate in a Bloomberg News survey of 16 economists was for a 1.3 percent decline. Producer prices fell 7.2 percent, the most on record.
Inflation may return as the economy recovers and commodity prices climb from last year’s lows. The central bank triggered an explosion in credit this year by scrapping restrictions on growth in new loans and keeping the one-year lending rate at a four-year low of 5.31 percent.
“China’s economy is already rebounding and as soon as it regains momentum, prices will return to positive territory,” said Sherman Chan, an economist with Moody’s Economy.com in Sydney.
Australia’s consumer confidence
By Jacob Greber
June 10 (Bloomberg) — Australian consumer confidence jumped in June by the most in 22 years after the economy unexpectedly avoided a recession, stoking speculation the central bank has finished cutting interest rates.
The sentiment index rose 12.7 percent from May to 100.1 points, according to a Westpac Banking Corp. and Melbourne Institute survey of 1,200 consumers conducted between June 1 and June 7. It’s the first time since January 2008 that the index was above 100, indicating optimists outnumber pessimists.
Australia’s currency and stock index extended gains as the jump in confidence reinforced central bank Governor Glenn Stevens’ view the economic growth will begin accelerating later this year. Home-loan approvals rose for a seventh month as the lowest borrowing costs in 49 years and government handouts bolstered demand among first-time buyers, a report showed today.
“Today’s data add to the case for the Reserve Bank to remain on the sidelines,” said Michael Blythe, chief economist at Commonwealth Bank of Australia in Sydney. “A rebound in confidence is an essential precondition for economic recovery.”
Sentiment among Australian businesses jumped in May by the most in almost eight years after the government said it will spend A$22 billion on roads, railways, hospitals and schools, a National Australia Bank Ltd. survey showed yesterday.
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