China Inflation


Inflation edges up in January

In January, consumer prices rose 4.5% over the same month last year, which was above the 4.1% registered in December and broke a moderating trend in place since August. Moreover, the January print overshot market expectations that had inflation inching down to 4.0%. The main driver behind the January acceleration was higher prices for food, which more than offset lower prices in the non-food category. According to analysts, food prices increased due to heightened demand during the Lunar New Year holidays. Accordingly, core inflation, which strips out volatile food costs, continued to moderate from 1.9% in December to 1.8% in January, which represents the lowest reading recorded since October 2010. Meanwhile, producer price inflation continued to slow and fell for the sixth month in a row, dropping from 1.7% in December to 0.7% in January. The print was broadly in line with market expectations and represents in fact, the lowest reading seen since November 2009. Due to the January moderation, annual average producer price inflation slowed from December's 6.0% to 5.6%.

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