Price Dynamics in China

International Monetary Fund

No 2010/221, IMF Working Papers from International Monetary Fund

Abstract: Chinese inflation, particularly non-food inflation, has been surprisingly modest in recent years. We find that supply factors, including those captured through upstream foreign commodity and producer prices, have been important drivers of non-food inflation, as has foreign demand for Chinese goods. Domestic demand and monetary conditions seem less important, possibly reflecting a large domestic output gap generated by many years of high investment. Inflation varies systemically within China, with richer (and urban) provinces having lower, more stable, inflation, but this urban inflation also influence that in lower-income provinces. Higher Mainland food inflation also raises inflation in non-Mainland China.

Keywords: WP; food inflation; price; China; inflation; inflation spillovers; provincial inflation; inflation pattern; commodity price inflation rise; Mainland inflation; producer price inflation; inflation expectation; inflation dynamics; Output gap; Commodity prices; Personal income; Producer prices; Global (search for similar items in EconPapers)
Pages: 26
Date: 2010-09-01
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