China Inflation

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China: Inflation hits multi-year low in January

February 10, 2015

In January, consumer prices rose 0.3% over the previous month, which matched the result tallied in December. The monthly reading reflected higher prices for foodstuffs as well as for medicine and medical care.

Annual inflation fell from December’s 1.5% to 0.8% in January, which represented the lowest rate since November 2009. The print undershot the 1.0% that market analysts had expected. As a result of the annual drop in inflation, the trend continues to point downward, with annual average inflation inching down from 2.0% in December to 1.9% in January, which marked a 54-month low.

Meanwhile, the producer price index fell 4.3% in January over the same month last year (December: -3.3% year-on-year), which marked the lowest rate since October 2009. Moreover, the print exceeded the 3.8% decline that market analysts had expected. The annual average variation of the producer price index inched down from minus 1.9% in December to minus 2.1% in January.

Although the subdued inflation reading for January partially reflected a distortion from the Chinese New Year, which falls in February this year but was in January last year, analysts warn that disinflationary pressures have increased and that it paves the way for further monetary policy easing.

FocusEconomics Consensus Forecast participants expect that inflation will average 2.0% in 2015, which is down 0.3 percentage points from last month’s estimate. In 2016, the panel sees inflation edging up to 2.3%. Meanwhile, the panel expects producer prices to decline 1.8% in 2015. In 2016, panelists see producer prices remaining flat.


Author: Ricard Torné, Lead Economist

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China Inflation Chart


China Inflation January 2015

Note: Year-on-year and annual average variation of consumer price index in %.
Source: National Bureau of Statistics of China (NBS).


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