By Gina Lee
Investing.com – China’s factory-gate inflation slowed to its slowest pace in six months in January 2022, thanks to government curbs bringing raw materials prices down.
Data from the National Bureau of Statistics (NBS) showed that the producer price index (PPI) rose 9.1% year-on-year, slower than the 10.3% growth recorded in December 2021 and the 9.5% growth in forecasts prepared by Investing.com.
Consumer price inflation also slowed year-on-year. The NBS data showed China’s consumer price index (CPI) grew 0.9% year-on-year, slower than the increase of 1.5% recorded in December and the 1% growth in forecasts prepared by Investing.com.
The CPI grew 0.4% month-on-month, also slower than the 0.5% growth in forecasts prepared by Investing.com and December’s 0.3% contraction.
China’s economy faces several headwinds in the year ahead, including a troubled property sector as well as weaker consumer confidence and spending as COVID-19 outbreaks lead to strict prevention and control measures.
However, the slow decrease in factory-gate price inflation from the 26-year high hit in October 2021 could cushion downstream firms struggling with high raw material costs and supply bottlenecks.
Although Inflation is expected to persist for some time globally, China’s ability to deal with abnormal price fluctuations has improved, the National Development and Reform Commission said earlier in the month.
The supply of coal, oil, and gas will be “guaranteed”, the country’s state planner added in articles released earlier in February. It also forecasts that the PPI would slow down further, while the CPI picks up, in 2022.
Investors also expect the People’s Bank of China to take further action to prop up a slowing economic recovery, with lowering inflation providing it the room to do so. The central bank already pumped a net CNY100 billion ($15.75 billion) into the banking system on Tuesday via its medium-term lending facility (MFL).