Beijing: China's inflation eased in January, providing Beijing with more leeway to shore up the economy ahead of a key political leadership meeting later this year.
The producer price index rose 9.1 per cent from a year earlier, official data showed Wednesday, weaker than economists' forecasts for a 9.5 per cent increase and down from 10.3 per cent in December. Consumer prices grew 0.9 per cent last month from a year earlier, according to statements from the National Bureau of Statistics, slower than a projected 1 per cent increase.
A moderation in inflation in recent months has given the central bank scope to cut interest rates and pump liquidity into the financial system to support a faltering economy. Beijing shifted to a more pro-growth bias late last year as a property market slump and repeated virus outbreaks dragged down growth in the world's second-largest economy. While the People's Bank of China refrained from cutting interest rates this week, market watchers expect further reductions in coming months.
"The moderation in January's CPI was mainly driven by food and energy inflation, but core CPI inflation remained weak at 1.2 per cent, suggesting still lackluster consumer demand," said Michelle Lam, Greater China economist at Societe Generale SA in Hong Kong. "Weak core consumer price pressures, as well as the moderation in PPI as coal price pressures recede, should open more room for policy easing."
The retreat in factory-gate inflation in January was largely due to the high base of comparison a year earlier. Higher costs in January continued to squeeze manufacturers, with purchasing managers' surveys showing both input and output price sub-indexes signaling faster gains.
"Prices in coal, steel and other industries fell in January, driving the overall price of industrial products to continue to fall," Dong Lijuan, senior statistician at the NBS, said in an accompanying statement. Consumer prices remained stable on the whole thanks to efforts to ensure supplies ahead of the Spring Festival, she said.
On Tuesday Premier Li Keqiang repeated the government's pledge to keep prices stable and help companies in downstream sectors ease cost pressures. Authorities should "attach great importance to solving the constraints in economic operations and stabilize market expectations," the regular State Council meeting chaired by Li concluded.