BEIJING, Jan 8 (Reuters) - China's annual consumer inflation likely accelerated to a seven-month high of 2.3 percent in December, a Reuters poll showed, but price pressures are expected to remain benign for the year.
The median forecast of 24 economists underscored tentative optimism that a gradual strengthening in domestic consumption in the world's second-largest economy is helping to offset still-sluggish global demand for Chinese exports.
'Cold weather and holiday-related demand have led to a surge in vegetable prices and a continued rise in pork prices,' Barclays said in a research note. China's annual consumer inflation had run at 2 percent in November.
Economists polled by Reuters also predicted China's producer price index likely dipped 1.8 percent in December from a year ago, easing from November's annual factory gate deflation of 2.2 percent.
Producer prices in China tumbled for much of last year, as weak demand weighed on the cost of raw materials.
'The major drag in the near-term lies in the external sector,' said J.P. Morgan's Haibin Zhu in a research note.
Economists said China's benign inflation trend leaves room for Beijing to ease monetary policy further to boost an economy struggling to throw off the drag from flagging export growth.
But wary of any spike in inflation, the People's Bank of China has shied from forceful policy easing.
After cutting interest rates twice between June and July last year, it has abstained from further cuts despite widespread market calls for looser policy.
It has also refrained from lowering banks' reserve requirements (RRR) since May 2012, when it cut the ratio of cash it requires lenders to hold as reserves by 50 basis points to 20 percent for China's biggest banks.
Instead, the central bank has preferred in recent months to ease policy by adding cash through short-term open market operations, a measure that analysts say is more flexible than outright cuts in rates or reserve requirements.
Still, the head of the Development Research Centre, a government think-tank, advised the central bank last week to stimulate economic growth by cutting RRRs this year to free up funds for bank to lend.
The China Securities Journal quoted Zhang Xiaoqiang, vice head of the National Development and Reform Commission, China's top planning agency, as saying last week that China's consumer inflation would run at 3.5 percent in 2013.
China's National Bureau of Statistics will release official CPI and PPI data on Friday.
For more previews on upcoming Chinese economic data next week, click CN-M-MCE-PRE.
FORECAST PPI CPI
(pct chg y/r) ANZ -1.7 2.4 Bank of China -1.2 2.2 Bank of Communications -1.7 2.4 Barclays 2.4 BofAML -1.8 2.3 CA-CIB -1.7 2.4 CDB Securities -1.8 2.3 China Construction Bank -1.7 1.9 CICC -2.0 2.3 CITIC Securities -1.9 2.2 Goldman Sachs -1.8 2.4 Guangdong Development Bank -1.8 2.1 Haitong Securities -1.8 2.1 High Frequency Economics -1.6 2 Hwabao Trust -1.9 2.3 Industrial Bank -2.1 2.2 JPMorgan Chase -1.7 2.3 Merchant Securities -2.1 2.2 Mizuho Securities -1.5 2.2 OCBC Bank -1.8 2.5 Peking First Advisory -1.8 2.4 Shenyin & Wanguo Sec -1.8 2.3 Standard Chartered -1.9 2.5 UBS -1.8 2.3 Zheshang Securities -1.8 2.5 -------------------------------------- Median -1.8 2.3 High -1.2 2.5 Low -2.1 1.9 Prior -2.2 2.0
(Reporting By China Economics Team) Keywords: CHINA ECONOMICS/INFLATION
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