China Industrial Output Rises 13.9%; Inflation Quickens to 3.5%

(Bloomberg) -- China’s industrial-production grew at a faster pace than economists estimated and inflation accelerated to the quickest since October 2008.

Output gained 13.9 percent from a year earlier, the National Bureau of Statistics said in Beijing today. Consumer prices rose 3.5 percent, compared with 3.3 percent in July, as food costs climbed.

China’s government has cooled the fastest-growing major economy by clamping down on property speculation, shuttering energy-intensive factories and limiting lending. HSBC Holdings Plc yesterday maintained forecasts for expansions of 9.5 percent in the third quarter and 10 percent this year after rebounding import growth in August highlighted domestic demand.

“China’s growth is gradually moderating from overheated in the first quarter to a more sustainable pace in the second half,” Sun Junwei, a Beijing-based economist at HSBC Holdings Plc, said before today’s release. “Inflation may peak in September.”

The consumer-price gain matched the median forecast in a Bloomberg News survey of 31 economists. The government’s full-year target is 3 percent.

Credit Agricole yesterday estimated a one-in-three chance of China raising the benchmark deposit rate after today’s data if the pace of inflation accelerated “significantly.”

An interest-rate increase is unnecessary because of limited inflation pressure, state economist Fan Jianping said, according to a China Securities Journal report today ahead of the data.

Economists’ Forecast

Economists’ median estimate was for a 13 percent gain in industrial output.

Today’s data follows yesterday’s announcement by the customs bureau of a 35 percent jump in imports and a 34 percent gain in August exports from a year earlier. Increases in property transactions and auto sales in August, led by SAIC Motor Corp. and FAW Car Co., also signaled strength in demand.

The Shanghai Composite Index has rebounded 12 percent from this year’s low on July 5 on speculation that the government may ease tightening measures, which range from restrictions on house purchases to a 7.5 trillion yuan ($1.1 trillion) annual limit for banks’ new lending.

“Rising CPI inflation could make the market nervous about a rate hike, but we don’t see any visible policy change in the near term,” Beijing-based UBS AG economist Wang Tao said ahead of today’s data. She sees inflation peaking at as much as 4 percent, then slowing by year-end.

Retail Sales

Retail sales gained 18.4 percent in August from a year earlier, from 17.9 percent in July, the statistics bureau said today. Producer price inflation slowed to an annual 4.3 percent pace from 4.8 percent.

Urban fixed-asset investment grew 24.8 percent in the first eight months of 2010 from a year earlier, the bureau said. That compared with a 24.9 percent gain for January-through-July.

Standard Chartered Plc. economist Stephen Green this week cited August manufacturing indexes, along with car and apartment sales, as evidence that economic momentum is “healthy.”

Gross domestic roduct rose 10.3 percent in the second quarter from a year earlier after an 11.9 percent gain in the first three months.

Industrial-output growth will continue to moderate in the second half as the government chases energy-efficiency targets and cools the property market, the Ministry of Industry and Information Technology said Sept. 7. The ministry also cited risks to export demand and a limit to growth due to comparisons with higher year-earlier bases.

In China’s north, Hebei, the nation’s largest steelmaking province, is demanding that producers such as Tangshan Iron & Steel Group and Shougang Corp. curb output to save energy, according to a local-government website.