Inflation at China’s factory gates has fallen to its lowest level in six months. In addition, the rise in consumer prices also slowed in January amid weakening demand in the housing sector, further curbs on the coronavirus and government efforts to contain raw material costs.
The producer price index rose 9.1% in January compared with the previous year, the National Bureau of Statistics said on Wednesday (16), compared with an expectation of 9.5% in a Reuters poll and an increase of 10, 3% in December. It was the weakest reading since July.
While rising producer prices in the world’s second-largest economy remain elevated due to supply issues, relatively benign consumer inflation contrasts with cost pressures in other economies.
Analysts believe that weakening inflation makes room for the central bank to ease monetary policy to support the economy, even as monetary authorities in other countries are tightening.
“Inflation concerns should not prevent further monetary policy easing measures (by the People’s Bank of China),” said Sheana Yue, an economist at Capital Economics.
China’s consumer price index rose 0.9% last month from a year earlier. Economists polled in a Reuters poll had expected a rise of 1%, after rising 1.5% in December.
“Lower inflation reflects weak domestic demand,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management. “Macro policies are supportive, but it takes time for the impact to be transmitted to the economy.”
Source: CNN Brasil
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