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China Ended Two Years of Negative Real Interest Rates

According to the statistics published by the National Statistics Bureau, February’s CPI growth was 3.2 percent compared with the same period last year, the lowest since July 2010. The February CPI was below the one year savings interest rate of 3.5 percent thus ending the two year long period of “negative real interest rates” where the CPI has been higher than the interest rate.

Among commodities, food is still the key factor that drives up CPI growth. For example, pork, fresh vegetables, and cooked vegetable’s prices have increased 18.2%, 12.3% and 6.1% respectively over the same period last year.

Source: Chinese Economy, March 10, 2012