Inflation in China

In other economic data news, China’s economy continues to roar ahead, while (officially measured) prices do not:

TOKYO (MarketWatch) – Chinese industrial production continued to boom in April, according to government data released Wednesday.

China’s industrial output rose 16% from that month a year earlier to 564.7 billion yuan ($68 billion), accelerating from March’s 15.1% on-year increase. April production had been forecast to slow to 14.6%, according to the median forecast of eight economists surveyed by Bloomberg News.

While booming production can be taken as a potential sign of overheating, consumer price data released earlier this month suggested the economy could be cooling.

The pace of growth in the nation’s consumer price index slowed to 1.8% in April compared with the same period last year, the lowest monthly rise in a year and a half. It was below March’s 2.7% one-year rise, was also below the 2.4% average rise forecast by nine economists surveyed by Bloomberg News.

I’ve never put much stock in any of China’s individual macroeconomic indicators, but this is especially true for its inflation measures; as far as I can tell they are compiled from rather arbitrarily (and politically) contrived local data, and thus are of highly questionable value. Is the rate of inflation in China actually falling? Maybe. But I’d guess that it is almost as likely that it is rising. One thing we can be sure of, however: production by the Chinese economy continues to leap ahead at an astonishing rate. I have my doubts about whether China’s economic managers have actually succeeded in cooling the economy, as they have claimed.