The producer price index increased 9.1% from a year ago, the National Bureau of Statistics (NBS) said in a statement on Wednesday
China’s factory-gate inflation eased to its slowest pace in six months and consumer price growth also softened in January amid weakening property sector demand, new coronavirus curbs and government efforts to rein in surging materials costs.
The producer price index (PPI) increased 9.1% from a year ago, the National Bureau of Statistics (NBS) said in a statement on Wednesday, slower than the 9.5% growth tipped by a Reuters poll and a 10.3% gain in December. It was the weakest pace since July.
While producer prices in the world’s second-largest economy remain elevated thanks to critical supply issues at home and abroad, China’s relatively benign consumer inflation contrasts with cost pressures seen in most other economies.
Analysts believe cooling inflation could provide room for the People’s Bank of China to ease policy to support the slowing economy, even as major central banks elsewhere tighten policy.
Inflation concerns are unlikely to hold back the (People’s Bank of China) from more policy loosening measures, said Sheana Yue, China Economist at Capital Economics.
China’s consumer price index (CPI) edged up 0.9% last month from a year earlier. Economists in a Reuters poll had expected a 1% rise following a 1.5% uptick in December.
Lower inflation reflects the weak domestic demand, said Zhiwei Zhang, Chief Economist at Pinpoint Asset Management. Macro policies have turned more supportive but it takes time for the impact to be transmitted to the economy.
The Chinese economy, particularly its vast manufacturing sector, has struggled with elevated production costs due to high global energy prices.
In January, coal mining and washing prices surged 51.3% year-on-year and oil and gas extraction prices jumped 38.2%.
China’s state planner earlier this month said global inflation is likely to persist for some time, but expressed confidence in the country’s ability to cope with abnormal price fluctuations.
The National Development and Reform Commission (NDRC) said it expects producer price inflation to slow further this year while consumer price inflation picks up.
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