(Bloomberg) -- China’s producer prices gained for the first time in a year in January as commodity prices climbed, while consumer prices fell back into deflation, reversing a gain in the previous month.
- The producer price index rose 0.3%, as forecast, compared with a 0.4% drop in December. The index declined every month last year, except for January
- The consumer price index fell 0.3% last month from a year earlier, following a 0.2% increase in December, the National Bureau of Statistics said Wednesday. The median forecast in a Bloomberg survey of economists was for no change year-on-year
Key Insights
- Consumer prices have weakened recently, mainly because of large base effects from high pork prices a year ago, when outbreaks of African Swine Fever had cut supplies
- Food price pressures are starting to increase again as cold weather combined with travel restrictions impact the transport of meat and vegetables
- A slowdown in consumption could curb core inflation. China saw a steep decline in travel in January ahead of the Lunar New Year, with local governments introducing testing and quarantine requirements to reduce the risk of coronavirus outbreaks
- Rising costs of steel, copper and coal are driving up factory gate prices, with PPI expected to register bigger increases in coming months, according to Bloomberg Economics
- January CPI data are impacted by calendar effects, since the Lunar New Year falls in February this year, compared with January in 2020
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