Inflation in China eases in December

Inflation in China hit a 15-month low in December but still remained stubbornly high at a time when policymakers are bracing for a slowdown in the world’s second largest economy.

The nation’s broad measure of consumer prices grew 4.1% last month from a year earlier. That’s down slightly from the year-over-year growth of 4.2% registered in November.

For the full year, inflation increased by 5.4% in 2011, well above the government target of 4%.

The central government is hesitant to loosen monetary policy for fear of worsening inflation, even in the face of an economic slowdown.

China’s trade surplus shrank to $155 billion last year from $183 billion in 2010 on weaker export demand and commodity imports that are now beginning to taper.

“With China facing a structurally higher rate of inflation, the policy space in which to loosen remains relatively narrow,” China-based analysts for IHS Global Insight wrote in a note to clients Thursday.